chapter
Introduction
The political economy of the Spanish growth model and its structural adjustment process
ByLuis Buendía, Ricardo Molero-Simarro
Pages 19

In the Introduction, we summarize the main features of the Spanish growth model, both before and after the crisis. We start by explaining the notion of adjustment process on wages as a tool for the recovery of corporate profitability across the world economy since the 1970s and its main dimensions: fiscal adjustment, trade liberalization, financial market reforms, privatization, and labor market deregulation. In addition, we present the heterodox theoretical perspectives that jointly comprise our approach. Then, we examine the formation of a triangle of actors (government sector, building sector, and financial capital) that shaped the Spanish growth model, together with the effects of Spain’s membership in the Economic and Monetary Union. After analyzing the weak fundamentals of that model, we clarify the dynamics of crisis and adjustment (in the form of socialization of financial losses, fiscal austerity, and wage devaluation) that have followed the bursting of the housing bubble. In addition, we put into question the alleged recovery of living conditions thanks to the recovery of GDP growth and employment during recent years. The Introduction concludes with a summary of the book’s structure and main contributions.