Spain's Economy & Society Under Franco: Autarky to Liberalization

Spain's Economy: Autarky and Intervention (1939-1959)

During the first decade, the priority was to rebuild the country, which was demographically and economically devastated. However, isolation and non-participation in the Marshall Plan made recovery difficult. Hunger forced rationing. To cope, Spain opted for a model of autarky and state intervention:

• Agencies were established to control prices, wages, and trade. Agriculture was controlled, factories were converted to producing basic goods, and the INI was created in 1941 to promote industrialization. Public companies emerged in strategic sectors, such as ENDESA, SEAT, and IBERIA, constantly receiving state aid, which generated huge public spending. The INI covered the deficiencies of the industrial sector by taking over unprofitable businesses.
• Continuation of this policy led to economic recession and the sinking of the domestic market.
• Autarky generated a black market, such that the government threatened the death penalty on speculators. Smuggling and black market sales networks spread, creating a parallel economy that made many rich.

In the 50s, economic liberalization started (1951), a prelude to development. Instrumental in the launch of this were:

1. U.S. economic aid, which allowed the import of capital goods needed for the industry.
2. Foreign investment.
3. Tourism.

This allowed the end of rationing (1952) and normalization of daily life, even though wages were low. Increasing demand allowed for additional income through "overtime."

However, foreign currency shortages and high inflation (1955-1957) led the government to appoint technocrats in 1957, who initiated the approach to the Common Market and economic liberalization that transformed the country and allowed it to recover production levels from before the war.

Society Under Franco

The Dictatorship returned socio-economic and financial hegemony to the landowning oligarchy.

It maintained an undeveloped social structure, which saw a constant rural-to-urban transfer. However, it remained a backward agrarian country, with a society polarized into the oligarchy and the rest of the population. Wages grew less than prices, consumption fell, and malnutrition spread among broad sectors of society, with epidemic cycles of tuberculosis, dysentery, and typhus.

A traditional and authoritarian mentality arose. Franco ruled with a strong crackdown on the opposition, and in the fifties, there were strikes by trade unions organized in secrecy and tensions at the university.

Conclusion

The economic changes of the fifties were shaping a new social structure, and signs of change appeared mainly in the working classes, the Church, and the University. However, the state continued to operate as before and without substantial changes, but simply formal adjustments.