THE SPANISH CRISIS THEORETICAL QUESTIONS AND EMPIRICAL ANALYSIS 11 TH A NNUAL H ISTORICAL M ATERIALISM C ONFERENCE 6-9th November 2014 School of Oriental & African Studies, University of London Juan Pablo Mateo Tomé Visiting researcher, dept. of Economics, Kingston University

I. THEORETICAL ASPECTS

Overview: the economic crisis Existence of one theory for the crisis within the Marxist approach How the general laws of accumulation manifest themselves in the Spanish economy Law of value → insufficient surplus generated: profitability crisis (TPRF) Spain: characterisation of the growth model Valorisation process centered in the construction sector → re- valorisation of residential assets or increase in the housing prices apart from objective foundations Investment ↔ Price {demand pushes up prices and price increase attracts more demand} → Profits Disequilibria in price deflators

Causes: → Profitability: social content, not psychological or technical – Problems in the capacity of generating surplus in other branches → Inelasticity of demand → External links (How can it be sustainable for the entire period? ) – Industry: elements for construction, transport infrastructure – Services: sale/ rental, reparations, plumbing, financial (credit loans, securitisation) – Particularities of Spain → Integration in the Eurozone – Less productive development – Vs tradable sectors

Implications of the housing bubble for the empirical research: It is not sufficient to analyse the behaviour of the macro categories (CK, p, r) – Sectoral restructuring – Stagnation of K/L, Y/L How to adress the level and dynamics of profitability? – The fictitious character of the rise in ‘r’ is revealed in the depreciation of assets → debt – Changes in the apparent causality: Investment → price → profit – Consequence: limits of the System of NA

II. MACROECONOMIC ANALYSIS

The Spanish case: a profitability crisis? Rate of profit  -17.4% (95-07)  -24.7% (95-12)

Long term rate of profit ( ) Surplus (Ameco and INE): VA – Wages All expressions of r descend abruptly from the max. reached in 1974 to 2012: r (total) → -46%; r (exc RE) → -51%; r exc RE-VSer → -43%

Conventional measures of profitability in (2000= 100) and total rate of fall since 2006

Technical composition, labour productivity and real wage (2000= 100) Growth period: Decrease in TCC and Y/L until 2000, but strong rate of increase of both K and L K/L barely increases <10% in , Y/L only increases 0,49% Labour productivity falls 3.3% in , w (GDP deflator) descends by 6% in Crisis: rise in TCC, Y/L and w (U)

“Capital productivity”, productivity efficiency of investment and prices (1999= 100) Y/K (max r) falls by 27% in Around 80% of the decrease originated in the lower level of Y/L reached by the weak TCC Similar path for the profit rate and Y/K, as long as profit-share has remained constant

III. SECTORAL ANALYSIS

Composition of net investment at current prices by type of assets Investment in construction, from 68.6% (1995) to 71-72% ( ) Increase in housing but slight decrease in other construction

Average price increase in investment by type of asset

Composition of total investment by sector of activity

Dynamics and level of capital accumulation by sector Particular “relationship” between TCC and Y/L”, with 2 exceptions: Deep reestructuring in the industry since 1980s, and in the 90s, in favor of low- medium technology branches Banking: high presence and dependence on real state activity

Annual average rates of labour productivity and price deflators ( ) The capital accumulation model based on the rise in price of assets leads not only to stagnation in productivity, but also to an internal destructuring Construction, Trade-Trans-Hot and Professional services → ∆P> 4% annual … … but Y/L falls by 2-4% per year

Sectoral rates of profit ( ) Higher r: Finances; Construction; Agriculture From 1997 to 2003, Construction is the only activity with an increasing and above average rate of profit. Even after 2003, it still is one of the most profitable sectors.