From Proletarios to Proprietarios: Moral Order, State Housing Policy and Financialization in Spain

Many studies of finance are driven by the assumption that the state, often understood as a "welfare state", protects workers from financial risks (Esping-Anderson 1990 ; Hacker 2008). In this perspective, financialization is seen as a process opposing private financial entities to market-embedding institutions, and the state, in this polanyian view, shelters the society from markets excesses. However, financialization scholars have increasingly shown the active role of the state in the creation of financial markets (Van der Zwan 2014), far from the representation of the "welfare state" as a "market-embedding" institution. Some describe neoliberalism as a driver of financialization (Kotz 2010), or financialization as a driver of neoliberalism that destroyed the Keynesian compromise (Duménil and Lévy 2004), and others are critical of the state as complicit in financialization processes (Martin et al. 2008). But in many cases, the analysis lacks a precise description of the political agenda of the state, its historical roots in financialized sectors and the way workers and consumers react to governmental injunctions.

The history of mortgage-backed security markets shows how the state may contribute to the creation of financial markets (Schwartz 2012 ; Schelke 2012). In the United States, the beginning of the story is known: in 1970, it was not a for-profit private financial entity that issued the first mortgage-backed securities, but the Government National Mortgage Association (Ginnie Mae). But state-led financialization of housing, by means of what would become mass-marketed financial products, was also experienced in other countries, where subprime credit led to devastating waves of foreclosures. Apart from societies with liberal economies like England, Ireland or Australia, evictions due to a credit boom in the housing sector were rife in Spain, Hungary, Latvia, and even China.

In Spain, the state authorized by law the first mortgage-backed securities in 1992.  According to a BBVA research group, a total volume of 428,000 million euros of securitization bonds were issued from 2000 to 2007, almost 71 % of which were backed by mortgage assets (Roibas Millan 2014). At the other end of the subprime chain, there were more than 604,489 foreclosures due to mortgage delinquencies since the beginning of the crisis (CGPJ 2015). In a country of 46 million inhabitants, this gave Spain a higher foreclosure rate than that of the United States, England or Ireland. Even if Spanish mortgage-backed securities were not directly issued by the Spanish state but by liberalized public savings banks, in the neoliberal context of the 1990s and 2000s they gave the government a valuable political and moral tool. Not only was it a way to stimulate the construction sector, integrate foreign workers to a citizenship based on debt and fight against unemployment. It was also a way to reconnect with decades-old policies aiming at strengthening the middle class, to avoid inner contestation during economic turmoil. Spanish subprimes were not a financial intrusion, an anomaly in a well-regulated political regime, but were part of a full-fledged political project: a sociedad de proprietarios, a society based on private ownership -  a political concept that goes back to the early years of the franquist regime and the moral order it intended to build.

In the aftermath of the Civil War (1934-1939), to eliminate any contestation and erase class identity in Spain, the dictatorial franquist regime (1939-1977) heavily relied on housing policies stimulating private homeownership. In 1958, according to José Luis de Arrese, head of newly created Housing Ministry, housing was "the laboratory for the best of man's virtues, for his quality as a man and for his eternal destiny: he is obligated to carry out the mission of family". If one Spaniard out of two was the owner of his house before 1950, in the 1980s the rate of homeownership reached 69 %. Later, after the transition, socialists and conservatives remained faithful to private homeownership, which is now 87 %, far more than in any other European country. In this case, the innovation in finance played a key role in implementing political programs: at the end of the 1990s and in the years 2000, mortgage-backed securities, sold on international markets, stimulated the construction business which represented more than 20 % in the years 2000.

Eventually, the failure of this 'sociedad de proprietarios' triggered political changes. It led to multiplication of popular dissenting practices, to the success of anti-finance movements directly confronting the state's policy, of the Indignados protests and Podemos electoral breakthrough. Grass-roots organizations and new politicians talked about developing affordable rent instead of mortgaged-backed securities. Meanwhile, class identities made a remarkable comeback on the political scene. This contribution, which relies on housing and financial institutions' statistics, interviews with bankers and housing activists, and on archives from the Spanish Ministry of Housing, intends to shed light on the relations between finance, morals and states - and to challenge some conventional representations of the state toward financialization.

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