Spanish capital in its worst crisis

25 June, 2020 · News> Europe> Spain

Alegoric statue over the BBVA original offices: the finance bourgeoisie rides over the four main national industries.

In Spain, there are between 30 and 35,000 active cases of Covid. This “new normality” has already begun to produce a rosary of new outbreaks. It seems that the government and companies are aware that there will be serious, perhaps massive, outbreaks along this path. This is what the planning of a batch of new temporary layoffs conditioned by a new increase in infections implies. But they don’t care about outbreaks. The patient to be saved is the invested capital. According to the IMF, the Spanish GDP will fall by 12.8% in 2020 dragged down by a second semester (July-December) in which GDP is expected to fall by 14.1%. This is the largest drop in GDP in an industrialized country. Also one of its worst crises. For comparison, in 2009, the worst year of the last recession, it fell by 3.6%. This is only a global perspective, looking closely and listening to the “strategies to get out of the crisis” proposed by companies, unions and government, the situation looks even worse.

Capital is devalued, companies become de-capitalized

Spanish capital will be among those suffering the most globally in 2020.

The “Business Summit” ends with a real message to the political apparatus: you must . Companies need more liquidity, and getting it means more state guarantees and more credits accepting increasing the risk of a banking system that is already facing a profitability crisis while organizing from the government a new wave of mergers that will scrape a little more profit from layoffs. That this is one of the main axes of the “plan” to get out of the recession should be at least indicative of the fragility with which capital and state have arrived at Covid.

The big companies do not expect to recover their 2019 profit rate until at least 2023. Those that emerged as “zombies” from the previous recession are being sold in pieces under the threat of insolvency proceedings (Abengoa) or at a loss (Caprabo is now selling for 17% of what it cost Mondragón more than a decade ago).

Capital devaluation and the de-capitalization of its applications (the companies) go hand in hand. Capital increases fell by 32.4% from January to May. It is not all a local effect of Covid: during the first quarter of the year, the input of foreign capital fell from 736 billion euros to 685.9 billion euros compared to the same months in 2019.

The “solutions”

The king closes the CEOE business summit.

Capitalism is not an excessively complicated game. Today the new roadmap of Spanish capital is quite clear. The consensus includes among its main ingredients the promotion of national production, the medium-term increase of taxes, an attack on pensions and the reduction of state spending on salaries of civil servants and hired personnel.

But in the short term, the priority is the rescue of the companies by the state and the assurance that some “strategic” companies and the capital that feeds them will have their profits guaranteed. One of the mantras repeated by all the big managers at the “business summit” was the need for “legal certainty” and “predictability”. The militant conservative press and their radio chatter wanted to interpret this as a warning against Podemos and its tax claims. But that’s not what is going on. It has nothing to do with that. The big managers were talking about something else and decoding it is important to understand how capital is trying to weather the storm.

Investment in electricity network infrastructure has a state guaranteed return and therefore zero risk. The government is now increasing the investment cap allowed to companies as a way to safely house large capitals during the recession and to help the profitability of banks in the process. But meanwhile, international funds say they do not trust “Spain”. Why? Because in 2013 the Rajoy government cut the return from renewable energies down, a move later backed by the Supreme Court that slashed the profits from billions of euros invested in solar and wind energy production infrastructures. Capital does not like risk. And even less the risk of having its expected profit and repayment times changed by decree. This, among other things, is called “legal uncertainty”. So what they are now demanding is not just state-guaranteed tax shelters but that the ones implemented under no circumstances be reversed, even if the state is at risk of bankruptcy.

The “allied” imperialisms

In other words, Spanish capital is willing to accept that the state will increase its deficit – this year it will rise according to the IMF to 13.9%– but will not accept “exceptional measures”, now or later, that would affect the profitability of its investments. And so it is quite difficult for the state to meet its ends.

In fact, when we now compare the state aid approved by the Commission across the EU, it turns out that 44% of the total is from Germany for German companies. Spain lags far behind with 4%. What does this mean? Basically two things: that Spanish companies will have to compete within their own market with heavily subsidized and therefore more competitive German companies; and that if one wishes to alleviate the impact to some extent, extra funds are needed that do not increase national debt and risk aggravating the adverse effect of the euro. In other words, Spanish capital depends for its survival on some famous European funds that today are neither approved nor is there a consensus among the EU states on their form and application. That is why Sánchez’s first planned trip is to Berlin. Video conferencing is not enough for the kind of alignments he wants.

The most important part for their workers is the election of Minister Calviño to preside over the Eurogroup. The move is a variant of the typical “prisoner exchange” of the bureaucratic apparatus. On the one hand it will help the Spanish government with a stronger position in negotiating the details of the funds, but above all it will guarantee Germany, Austria, Holland, Sweden and Denmark that these funds will be accompanied by “austerity policies” even more “rigorous” than those of the previous recession. González Pons, vice-president of the European People’s Party, stated this very clearly today when he supported the Spanish candidacy: “there is no better guarantee” that the government will be obedient to Brussels.

And as a first signal to locals and foreigners alike: abandon the large fortunes tax project in exchange for PP support to defend a limited “Google tax” aimed at US multinationals, although quite a few large Spanish companies, from Grifols to Santander and BBVA use the same tax evasion mechanisms.

But the United States, which is once again threatening a new wave of tariff attacks , can count on Brussels and its compensation, given that Germany and France will also suffer US reprisals in defense of the technological giants. A good example of how every step forward in the crisis necessarily produces movements that, while apparently internal, increase the tension between imperialist interests.

The unions and their “demands”

The unions present the call for mobilizations for this Saturday.

In the current state of the crisis, there is no better way than to listen to the trade unions to discover the interests of the capital invested in the industrial structure. Just today the trade union chairman of the Alcoa works council was shouting out his demands on public radio. Not a single one of them had anything to do with the workers. All were the demands of an investor in distress: renationalization of production chains and national production even through state ownership if there is no other way out and as a means to ensure “the future” of profitability: “green electricity” prices below the cost of production and subsidies in the form of carbon offsets. The capital invested in the factory could not have dreamed of a better spokesman vis-à-vis the state. In fact the message of the union leaders is indistinguishable from that of the owners of industrial companies. But the interests of the workers are nowhere to be seen.

At the national level, the trade union headquarters are calling for a first mobilization this Saturday. To ask for a new round of “Moncloa Pacts”. That is, to repeat the move that over forty years ago served to dismantle the struggles of the workers’ moment in the name of democracy, to guarantee the trade union’s power company by company and to initiate the massive precarization of the regulatory framework of labor relations. A great idea! But not for the workers.

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