Economic and Social Transformation in Francoist Spain (1939-1975)
The Franco Regime and its Economic Policy
The Franco regime (1939-1975) was a military dictatorship that imposed a totalitarian system, controlling all branches of government. Its autarkic economic policy, characterized by protectionism and self-sufficiency, led to economic depression, property restrictions, and a disruption of the modernization and growth process initiated by the preceding Republican government.
Autarkic Economy and its Consequences
Franco’s economic policy aimed to establish an autarkic economy to reduce imports and achieve self-sufficiency. The government intervened heavily in the economy, establishing the Protection and Promotion of National Industry in 1939 to limit foreign capital and production. The Instituto Nacional de Industria (INI) was created to promote and nationalize industries, particularly those related to the military. Public companies like Iberia, ENSIDESA, ENASA, and SEAT emerged, along with the nationalization of telephone and railway systems (RENFE).
This inconsistent plan was adapted to the regime’s political and economic interests. Agriculture suffered greatly under this system. Technical backwardness, lack of fertilizers, hidden unemployment, autarkic measures, and a severe drought caused a decline in production. Comprehensive plans were launched to improve the situation through irrigation, housing, and grid expansion.
However, the economic policy had many flaws. The absence of a competitive market led to arbitrarily set prices, making protected products more expensive. This resulted in rising inflation and slowing growth.
Social Assistance and the Black Market
The regime used social assistance to address food shortages, extreme poverty, and hunger. Ration cards were distributed to ensure minimum supplies for the population, and agricultural surpluses were collected through the National Wheat program.
Food scarcity increased, and the measures taken proved insufficient. A black market emerged, based on speculation, where abundant products could be found at high prices. This practice favored usury and cronyism.
Economic Liberalization and Development
International pressure and domestic economic difficulties forced Franco to reshape his government in 1951. In 1957, advised by Carrero Blanco, he formed a new government that included members of Opus Dei, known as technocrats. These individuals advocated for economic liberalization while remaining conservative on political and social issues.
Stabilization Plan and its Impact
The government devalued the peseta, launched a tax reform, and joined the OEEC and the IMF in 1958. However, Spain was not admitted into NATO or allowed to receive benefits under the Marshall Plan.
The Organic Law of the State, enacted in 1967, closed a long constitutional process, providing the regime with a semblance of a constitution to appease democratic countries. It also secured the monarchy within the principles of the Movement, legitimizing Franco’s continued rule as the victor of the Civil War.
The Decree-Law of the New Economic Order, known as the stabilization plan (1959), ended autarky. Its main objective was to balance payments through monetary-fiscal reforms. These reforms limited private sector credit, eliminated tax subsidies to public enterprises, controlled and reduced public spending, and granted amnesty for repatriated capital.
Trade measures were also established, including the devaluation of the peseta, its convertibility, and the liberalization of foreign investment and trade.
The initial impact of the plan included negative effects such as a wage freeze, increased taxes, rising unemployment, reduced working hours, lower domestic demand, business closures, and increased emigration. However, positive effects were also observed, including a decrease in inflation, an increase in industrial exports, and a more balanced balance of payments.
Development Plans and Economic Growth
In 1962, the Plan Commission for Development was created, led by López Rodó. These plans focused on industry, which experienced rapid growth in the automotive, steel, and chemical sectors. Development zones were established in Barcelona, Bilbao, and Madrid to support less industrialized areas, but these areas often received less profitable projects, hindering development in the most backward regions.
Improvements in road and rail transport, distribution channels, product marketing, and job creation were hampered by a lack of comprehensive development. This occurred as Spain began integrating into the international economy, liberalizing the market and signing a preferential agreement with the EEC.
Tourism had a significant impact on the urban structure, economic development of the Mediterranean coast and islands, and the modernization of customs. Remittances from migrants to their families in Spain, coupled with tourism revenues, were crucial for balancing the balance of payments. Foreign investment flowed into more profitable industries.
Between 1960 and 1975, national income tripled, GDP rose, and per capita income doubled. Spain transformed into an industrialized country, shifting from a predominantly agrarian economy to an industrial one. The population increasingly engaged in the services sector.
Social Transformation and Opposition
Population growth and unequal wealth distribution intensified migration. Tourists and returning emigrants exposed Spain to a different way of life, contributing to an improved standard of living and reducing the risk of war. Migration also fueled urban development, as cities became crowded due to the influx of rural residents.
The middle class expanded, and society became more diverse and dynamic. The role of women evolved as they received more education and joined the workforce. Consumerism surged in Spain, with the emergence of new appliances and the popularity of the SEAT 600 car.
Education also improved, with the General Law of Education, introduced by Palastí Villar, making schooling compulsory until the age of 14. A new labor movement emerged, gaining strength in major industrial centers, led by the Workers’ Commissions (CCOO).
Opposition to Franco grew. Universities became hotbeds of dissent. The Church asserted its independence, which Franco perceived as a betrayal. Political parties, such as the PSOE and PCE, gained prominence. Nationalist movements like ETA also emerged.
Conclusion
In conclusion, Spain experienced unbalanced population growth, with industrialized cities attracting more residents. Economic progress propelled Spain to become the 10th largest industrial power in the world, transitioning from a rural to an industrial economy. This transformation was driven by development plans, foreign migration, tourism, and foreign investment.
d foreign investment.