In the second half of 2008, one of those phenomena that for the mainstream in economic science constitutes a black swan, a strange phenomenon alien to the logic of the market and capitalism, broke out in Spain. It is something totally unexpected which obviously does not deserve the elaboration of a theoretical framework for its analysis: the first great economic crisis of the twenty-first century, known as the Great Recession of world capitalism. For Spain, it may well be called a truly economic depression.
There are two interesting things in the analysis of a crisis. First, to study it in relation to the logic of the economic system. That is, to delve into the gloomy bowels of concrete phenomena in order to elucidate the reasons why this time the crisis has manifested itself in a certain way in today’s society. In this case, the evolution of the macroeconomic variables, the institutional framework of economic policy, the most recent historical legacy, as well as the international context must be addressed. A complex task that requires some simplification, but that must provide certain causal relationships that allow us to interpret the chain of events.
The second motivating issue, I must confess, is to show liberal economists up. Certainly, it is a rather personal aspect, who knows if by some desire to externalize the multiple grievances that persistently occur in the faculties of Economics. Indeed, it is also explained by the interest in participating in this battle of ideas, so that people interested in political economy can once again prove the explanatory incapacity of orthodox currents of economic thought.
An exercise in recent historical memory becomes fundamental: after the outbreak of the crisis, all economists seemed to know how to explain it, and in fact it turns out that they had anticipated it, albeit probably in privacy. In Spain, Gonzalo Bernardos, often appearing in mass media to talk about economics, boasted during a debate on television as late as in 2004 that there was no real estate bubble.1 José Luis Malo, who was director of studies at the Bank of Spain, still claimed in 2007 that “we have never talked about a real estate bubble, nor do we expect anything other than a mild deceleration” (cited in Muñoz-de-Bustillo 2014: 58). Logically, it could not be something different to expect in the then president of the government, José Luis R. Zapatero, who firmly believed that Spain was already in the Champions League of the economy. During the 2008 electoral campaign, he convincingly denied that any crisis would break out. Furthermore, Zapatero himself proudly affirmed in September of that year that Spain had exceeded Italy in per capita income, to the sadness of its president Silvio Berlusconi, and that the next objective was to overcome France in the three or four following years.2 With the perspective of time, these statements, their tone and the laughter of the companions all acquire a regrettable and shameful meaning, but their interest is undoubtedly evident.
Of course, one can always resort to the typical accusation against politicians, because private management—according to the usual liberal analysis—would have forced the innovative entrepreneur to be more efficient and sincere in front of the shareholders. Emilio Botín, who was for decades the most important banker in Spain, president of Banco Santander—and one of those who in some way actually govern, but without standing for election—declared at the shareholders’ meeting in mid-2008 that the worst of the financial instability seemed to have passed, and that his bank did not have economic difficulties (El País 2008).
And if it was necessary to give the word of honor, so it was: Juan Ramón Quintas, president of the Spanish Confederation of Savings Banks (CECA), did not hesitate to ensure that the Spanish financial system was the best in the world, so that no intervention to bail any savings bank out would be necessary, unlike the rest of Europe or the United States (cited in Palafox 2017).
But also outside Spain the discourse was similar. Ángel Gurría, General Secretary of the Organisation for Economic Co-operation and Development (OECD), also denied the existence of any speculative bubble, and expected at best a soft deceleration (in Muñoz-de-Bustillo 2014). There remains for me doubts as to the sincere belief in such statements, or there are rather hidden interests forcing to disguise the truth. In light of this, some critical words of Marx certainly do not lose relevance:
The vulgar economists—by no means to be confused with the economic investigators we have been criticising—translate the concepts, motives, etc., of the representatives of capitalist production who are held in thrall to this system of production and in whose consciousness only its superficial appearance is reflected. They translate them into a doctrinaire language, but they do so from the standpoint of the ruling section, i.e. the capitalists, and their treatment is therefore not naïve and objective, but apologetic. (Marx 1861–63: 450 [Marx—Engels Collected Works, (MECW) 32)
Analytical Purpose and Theoretical Framework
As the title itself indicates, in this book I intend two objectives related to the economic crisis. Firstly, a theoretical discussion based on the methodological foundations underlying different conceptions of the crisis in economic theories. The aim is to identify the place occupied by the theory of crisis in the broader conception of the reproduction along time of the capitalist mode of production (hereinafter, CMP). Secondly, the empirical study of the great crisis of the Spanish economy, which broke out in the second half of 2008, and which lasted until 2013–2014.
I argue that the fundamental root cause of the Great Depression in Spain—as a crisis of the capitalist economy—lies in the sphere of the valorization of capital. The crisis is thus a valorization crisis, which is reflected in profitability since the volume of surplus generated was insufficient for the continuation of the accumulation process.
Both purposes are related in the book. In the theoretical part, the elements of the economic analysis necessary for an adequate delimitation of the concept of crisis are presented in a critical dialogue with various schools of economic thought. Afterward, the controversy will continue in the two empirical parts. It is not only intended to highlight what I consider to be the fundamental cause of the crisis, but to submit other explanations to a critical survey.
This research draws on the tradition of political economy, and specifically the Marxist analysis. Certainly, many interpretations and currents within this theoretical framework can be found, but it is no less true that there cannot be a Marxism without the labor theory of value (Guerrero 1997b), neither “Marxism without Marx” (Freeman 2010). Recognizing the many and varied sources that have contributed to anyone’s intellectual development—on the other hand in my case unfinished, just beginning—, clear limits must be placed on eclecticism.
The Marxist approach can be placed in the classical political economy tradition of A. Smith, D. Ricardo (and J.S. Mill), but with fundamental differences. After all, Marx carried out a critique of political economy. In any case, the conception of economics is that of a social science that studies the form that production and distribution takes within the framework of capitalist society. “Economics” is therefore political economy, in opposition to that Economics that Alfred Marshall established, apparently free of ideologies. Consequently, in opposition to the sequence Individual-scarcity-choice-efficiency-exchange-market-market economy, the path Society-reproduction-labor-social output-surplus-mode of production-capitalism (Guerrero 1997a) is preferred. This book does not pretend to be ideologically neutral, but deeply rigorous in both theoretical and empirical analysis.
The first feature that defines an economic theory is the conception of value. What is its foundation, and how are prices explained? How is surplus defined, if it indeed does exist? Socially necessary labor time, or abstract labor, is the foundation of value for Marx’s analysis. In this sense, it is an objective theory, because it starts from the objectivity of the social relations of production, not from the subjectivity of the individual. Labor in the abstract is the content of value, and adopts this form in the framework of capitalist production.3 In a simpler way, how to explain the gross domestic product (GDP), which is the monetary value of goods and services produced in an economy during a year? Thus, this GDP would be the form of expression in monetary units of the amount of labor that wage earners have carried out. Therefore, the Marxist approach considers that the sphere of production has analytical priority. This perspective is present in the book when dealing with capital profitability and the limits of an accumulation process associated with asset-inflation.
One implication is that the idea of social contradictions is emphasized. If there is surplus production, which is appropriated by capital, then there are essentially two social classes, capital and labor—apart from other intermediate layers. There is no social harmony, as in Neoclassical economics, but struggle and confrontation, instability, imbalances. This turbulence takes other forms as well: capital competition is an open battle in which each capital seeks to produce at lower costs and reducing prices, and complemented by the dialectic of States—international geopolitics. Thus, the book addresses the contradictions present in the dynamics of accumulation in Spain based on the technology of production (the composition of capital, productivity, prices), in light of the underlying problems of profitability, and in the framework of the Eurozone. That is, the materialization of the tendencies inherent to capital for the Spanish economy will be the purpose of this book, with the aim of maintaining coherence with the theoretical framework, and always showing a critical dialogue with other currents of analysis.
The importance of Marxist criticism, based on the centrality of the fundamental structures that define the capitalist system as such (see Smith 1990) will be highlighted. In this sense, it constitutes a conception with a material—objective sense, which without denying its relevance, is not based neither on ethical judgments or individual desires. In other words, this economic analysis relies explicitly on a philosophically materialist approach. In addition, the revolutionary character that this emphasis on the objective structures of capitalist society needs to be reclaimed.
Following Guerrero’s proposal (see Guerrero 1997a), a heterodox economic approach requires one of the following features. Either a conception of value based on labor, that is, a labor theory of value, or...