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THE SPANISH CRISIS THEORETICAL QUESTIONS AND EMPIRICAL ANALYSIS

THE SPANISH CRISIS THEORETICAL QUESTIONS AND EMPIRICAL ANALYSIS. 11th Annual Historical Materialism Conference 6-9th November 2014 School of Oriental & African Studies, University of London. Juan Pablo Mateo Tomé Visiting researcher , dept . of Economics , Kingston University

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THE SPANISH CRISIS THEORETICAL QUESTIONS AND EMPIRICAL ANALYSIS

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  1. THE SPANISH CRISISTHEORETICAL QUESTIONS AND EMPIRICAL ANALYSIS 11th Annual Historical Materialism Conference 6-9th November 2014 School of Oriental & African Studies, University of London Juan Pablo Mateo Tomé Visitingresearcher, dept. of Economics, Kingston University Email: j.mateotome@kingston.ac.uk

  2. I. THEORETICAL ASPECTS

  3. Overview: theeconomic crisis • Existence of onetheoryforthe crisis withintheMarxistapproach • Howthe general laws of accumulationmanifestthemselves in theSpanisheconomy • Law of value→ insufficient surplus generated: profitability crisis (TPRF) Spain: characterisationof the growth model • Valorisationprocess centered in the construction sector → re-valorisation of residential assets or increase in the housing prices apart from objective foundations • Investment ↔ Price {demand pushes up prices and price increase attracts more demand} → Profits • Disequilibria in price deflators

  4. Causes: → Profitability: social content, notpsychologicalortechnical • Problems in the capacity of generating surplus in other branches → Inelasticity of demand → Externallinks (How can it be sustainablefortheentireperiod? ) • Industry: elements for construction, transport infrastructure • Services: sale/ rental, reparations, plumbing, financial (credit loans, securitisation) • Particularities of Spain → Integration in theEurozone • Lessproductivedevelopment • Vs tradablesectors

  5. Implications of thehousingbubblefortheempiricalresearch: • Itisnotsufficient to analysethebehaviour of the macro categories (CK, p, r) • Sectoralrestructuring • Stagnation of K/L, Y/L • Howtoadressthelevel and dynamics of profitability? • Thefictitiouscharacter of therise in ‘r’ isrevealed in thedepreciation of assets→ debt • Changes in theapparentcausality: Investment → price → profit • Consequence: limits of theSystem of NA

  6. II. MACROECONOMIC ANALYSIS

  7. The Spanish case: a profitability crisis? • Rate of profit • -17.4% (95-07) • -24.7% (95-12)

  8. Long term rate of profit (1970-2012) • Surplus (Ameco and INE): VA – Wages • Allexpressions of r descendabruptlyfromthemax. reached in 1974 to 2012: • r (total) → -46%; • r (exc RE) → -51%; • r exc RE-VSer → -43%

  9. Conventional measures of profitability in 2000-12 (2000= 100) and total rate of fall since 2006

  10. Technical composition, labour productivity and real wage (2000= 100) • Growthperiod: • Decrease in TCC and Y/L until 2000, butstrongrate of increase of both K and L • K/L barelyincreases <10% in 2000-7, Y/L onlyincreases 0,49% • Labourproductivityfalls 3.3% in 1995-07, w (GDP deflator) descendsby 6% in 1995-06 • Crisis:rise in TCC, Y/L and w (U)

  11. “Capital productivity”, productivity efficiency of investment and prices (1999= 100) • Y/K (max r) fallsby 27% in 2000-12 • Around 80% of thedecreaseoriginated in thelowerlevel of Y/L reachedbytheweak TCC • Similar pathfortheprofitrate and Y/K, as long as profit-share has remainedconstant

  12. III. SECTORAL ANALYSIS

  13. Composition of net investment at current prices by type of assets • Investment in construction, from 68.6% (1995) to 71-72% (2004-07) • Increase in housingbutslightdecrease in otherconstruction

  14. Average price increase in investment by type of asset

  15. Composition of total investment by sector of activity

  16. Dynamics and level of capital accumulationby sector • Particular “relationship” between TCC and Y/L”, with 2 exceptions: • Deep reestructuring in theindustrysince 1980s, and in the 90s, in favor of low-mediumtechnologybranches • Banking: highpresence and dependenceon real stateactivity

  17. Annualaveragerates of labourproductivity and pricedeflators (1995-2007) • The capital accumulationmodelbasedontherise in price of assets leads notonly to stagnation in productivity, butalso to aninternaldestructuring • Construction, Trade-Trans-Hot and Professional services→ ∆P> 4% annual … • … but Y/L fallsby 2-4% per year

  18. Sectoralrates of profit (1995-2012) • Higher r: Finances; Construction; Agriculture • From 1997 to 2003, Constructionistheonlyactivitywithanincreasing and aboveaveragerate of profit. Evenafter 2003, itstillisone of themostprofitablesectors.

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