Franco’s Spain: Economic Policies and Post-War Development
Economic Developments
Autarkic and Corporate Capitalism
After the civil war, the Franco authorities practiced an autarkic economy. Their goal was to make Spain an economically self-sufficient nation. This involved disproportionate state intervention in the economy.
- Tight control of foreign trade was held through the Ministry of Industry and Commerce and the Spanish Institute of Foreign Currency.
- Industrial development was promoted through the Law on Protection and Promotion of National Industry and the Management Act and National Defense Industry, both in 1929.
- The Instituto Nacional de Industria (INI) was established in 1941, promoting and participating in several companies (ENDESA, SEAT, CASA, ENSIDESA, etc.).
- Growers were forced to hand over a significant portion of their products at officially fixed prices to the National Grain Service and the National Police Supply and Transport.
To carry out its economic policies, Franco’s regime used the Spanish Trade Union Organization (OSE), created in 1940 following the adoption of the Law on Trade Union Unity and the Law of Basis of Union Organization. The OSE was inspired by the principles of unity, totality, and hierarchy. It necessarily framed entrepreneurs, technicians, and workers in a particular branch of production in the Vertical Unions. These were arranged hierarchically, with commands from the Movement.
Autarkic capitalism and corporate work amid many difficulties:
- The huge foreign trade restrictions, excessive state interventionism, and excessive regulation stalled agricultural and industrial development.
- The state could not fulfill its role as a modernizing and stimulating economic growth.
- The country unfolded amid a dearth.
- Ration cards were introduced, and people were forced to resort to the black market.
- This situation affected all Spaniards, but more strongly the workers and the popular classes.
The Beginnings of Economic Modernization
The government formed in July 1951 raised the need to improve the living conditions of the Spanish and to make economic ideology more flexible.
Economic Openness
Foreign aid came in 1953 through the Hispano-American Agreement that Spain signed with the United States. This involved the delivery of 1,500 million dollars and the shipment of products. The new economic situation increased the likelihood that foreign capital began to flow into Spain, although the law continued to impose many limitations.
The Abandonment of Economic Interventionism
The agricultural policy launched from the Ministry of Agriculture was directed to eliminate mandatory caps, binding surfaces, and low-rate prices. It was intended that farmers began to respond to market forces. The abolition of ration cards (1952) also brought an advance release. The fight against interventionism was practiced by driving the relaxation of certain tough industrial regulations and nullifying some of the INI’s autarkic projects.