The Franco Regime, 1936–1975

16. Social and Economic Policy in the 1940s

1~ Social and Economic Policy in the 1940s The policy of economic autarchy and import substitution adopted in 1939 remained in effect, with varying degrees of modification, for the next two decades. As discussed earlier, autarchy suited Franco's own predilections as well as the international conditions during World War II, and the policy ofostracism made its continuation almost inevitable after 1945. A few economic administrators such as the commerce minister Carceller had urged a more liberal and internationalist approach during the last phase of World War II, but such an option would not emerge fully until the 1950s, and even then the regime would be slow to take advantage of it. There is no doubt that the program of autarchy was generally inefficient .1 Policy was relatively arbitrary and frequently improvised, and it varied considerably from one sector to another with little attempt at coordination . It intended to discourage the international market and exports in general while emphasizing import substitution industries. State controls determined nominal prices and wages in most categories, and state policy reinforced the existing structure of small enterprises by providing credit no matter how inefficient the firm. Thus the economies of scale required for optimal functioning usually could not be achieved, and when new plants were established in nonindustrialized areas-laudable from the viewpoint of overcoming regional imbalance-that also increased their cost. More rapid and efficient development required intensive capital investment as well as new technology, both in short supply, while state 1. For general economic policy during 1945-50, see Hos Hombravella et al., 1: 172-270. A critique of the paternalism and limited rationality ofdevelopment under autarchy will be found in Carlos Moya, El poder econ6mico en Espana (1939-1970) (Madrid, 1975), 93-119, 143-71. Miguel Capella, La autarquia econ6mica en Espana (Madrid, 1945), presents an idealized official description of the autarchy policy at this time. 384 Social and Economic Policy in the 19408 385 Table 16.1. Foreign Commerce of Spain, 1940-50 Adjusted Index Balance in Millions Imports Exports ofGold Pesetas 1931 90 116 -211 1935 100 100 -290 1940 55 49 -226 1941 45 46 -29 1942 46 43 25 1943 48 56 -30 1944 41 73 130 1945 47 68 18 1946 52 56 -110 1947 63 59 -276 1948 69 72 -326 1949 69 76 -225 1950 64 98 -5 Source: Instituto Nacional de Estadistica, in Vinas et al., Politica comercial exterior en Espana (Madrid, 1979), 1:489. priorities and international ostracism combined to discourage any search for foreign capital. Autarchy was most rigorous in foreign commerce and exchange.2 As indicated in table 16.1, Spain regained her approximate pre-Civil War level ofexports only in 1950, while financial stringency and a persistently negative balance kept vital imports below the norm of 1936. By this time Franco had abandoned his extravagant notions about Spain's national resources. He almost reversed the argument in an address to Asturian miners in May 1946, attributing Spain's lower standard of living to her lack of colonies. "Nobody in the universe works for Spain," the Caudillo declared. "Spaniards earn their bread by the sweat of their brow."3 Such an explanation was well suited to the pompous rhetoric of the period, for it arrogated to Spain a position of moral superiority, relatively poor but honorable and nonexploitative compared with the major powers. State policy emphasized coal and steel production and hydroelectric expansion , areas that had registered major gains by the close of the 1940s. The National Institute of Industry (INI) played a significant role, espe2 . It has been suggested that the personalistic system ofcontrol reached its height in the "modelo Navascues," as developed by Emilio Navascues y Ruiz de Velasco in the Secretaria de Economia Exterior y Comercio from February 1947 to March 1948. Angel Vinas, "La administraci6n de la politica econ6mica exterior de Espaiia, 1936-1979," Cuadernos Econ6micos de ICE, no. 13 (1980), 157-247. For a detailed treatment of external commercial policy in the late 1940s, see Vinas et al., Politica comercial, 1:453-616. 3. Quoted in Trythall, Caudillo, 217. 386 III. The Dictadura, 1939-1959 cially in coal, fuels, and electric power. From 1942 to 1948 it developed major new enterprises including the national airline Iberia (1943) and ENASA (1946), which fostered Pegaso, the country's principal producer of trucks and buses, while participating in the restructuring and expansion of scores of others.4...