chapter  1
The accumulation model of the Spanish economy
Profitability, the real estate bubble, and sectoral imbalances
ByJuan Pablo Mateo, Miguel Montanyà Revuelto
Pages 29

Chapter 1 addresses the dynamics followed by the process of capital accumulation in Spain during the period 1995–2015 using a political economy approach. The study of the economic performance considers both the fundamental features of the growth stage (up to 2007–2008) and the specific aspects of the economic crisis that led to a long recession. The two phenomena are interrelated, and investigation of the economic boom provides the keys to the subsequent crisis. The growth phase was led by real estate activities, mainly in the construction sector, whose knock-on effects over final production and employment were important and grew over the expansive period. By then, the underlying problems of valorization were compensated fundamentally by lower financial costs, but also by stagnant wages; otherwise, the Spanish economy would have been incapable of sustaining up to 13 years of continuous capital accumulation. For all these reasons, the burst of the real estate bubble deepened the recession of the economy. The crisis reduced the weight of both the real estate complex in the economy and its knock-on capacity with respect to other branches of activity. However, no other sector of activity has significantly expanded its capacity to drag on the rest. The impact of the latest housing bubble remains fundamental also to understanding the boom in both the material requirements of the economy and its waste emissions – key elements in the environmental unsustainability of the Spanish economy.