Spain Economical Philosophy

Spain was known for its strength in terms of economic dominance in the 15th and 16th centuries. During this time the Spain had so much power that it dominated most parts of Europe. This was influenced by early civilization of Spain which began during the Stone Age period. The country’s rich mineral and agricultural wealth in addition to its good position made it become a popular trading zone. Commerce and industry became the source of strength for this nation especially for the early Iberian people who began building strong empires at Tartesos which became the center of civilization during the early 1200 B.C. The Phoenicians also established rich trading center at Cadiz at around 110 B.C just before the Roman conquest (Tortella, Gabriel, 2001) Spain has seen several wars that were propagated by various groups of people from ancient times.

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These wars were established to regain territories that had been lost. For instance, after Muslim invaders took control of the peninsula where they even established a caliphate, the Christian Visigothic kingdoms began their struggle to regain the lost territories. This took almost eight hundred years where the Galicians managed to liberate the regions that had been dominated by the Muslims.

During this period the Basque country emerged as the most industrialized region in the country. The other regions of the country also developed economically but the southern region partly lagged behind in terms of its income and economic development. The political instability caused by the civil wars led to economic stagnation of this nation for a long period. The country emerged from the series of wars with several economic problems. This is particularly because most of its gold and other reserves that composed its foreign exchange had been almost wiped out by the effects of the crises. In addition, the war had led to reduction of the production capacity of important areas of the economy like agriculture and industry. This went on until around 1960s when the economy of Spain started to grow due to political stability that enabled aspects like tourism to flourish.

Spain is a nation was greatly influenced by mercantilism as the main economic philosophy from its early period. This philosophy involved an economic practice whereby the government took control of foreign trade due its importance in ensuring that the nation’s prosperity and security is guaranteed. The various impacts that this philosophy had on Spain’s economy can be seen in its policies. For instance, the adoption of this philosophy influenced most of Spanish economic activities especially due to its belief that accumulation of gold, silver and other minerals was an important factor in determining the nation’s wealth. This is in line with belief in the ideals of the philosophy which restricts the exports of precious metals like gold and silver.

Spain participation in the activities of the Age of Exploration was an evidence of the country’s search for wealth through conquering various territories in order to control trade in these regions (Rayment, W.J. 2011). This is because Spain policy was based on the notion of increasing professionalism in war in order to turn adequate reserve funds into expensive and competitive business. The government also sought to increase its income through high tariffs that it imposed on manufactured products and the payment from the merchants. Spain did this by conquering Inca Empire where at first the county did not make a lot of profit but later started benefiting from the gold that was coming from this conquered territory and Mexico City. These gains encouraged Spain and other nations to continue with their exploration where the government financed several expeditions to totally new territories in order to pursue its trade missions. These trade endeavors brought valuable agricultural and mineral resources to Spain through its various trade routes. In addition, the country benefited from the new products that were introduced like potatoes, corn among others. Spanish Crown used the gold and silver that were mined in various areas like America for various purposes. For instance, these products were used for the payment of its troops in Netherlands, maintenance of emperor’s forces in Germany and satisfaction of the high demand in the home market. These products however, had a great impact on the economy of this nation. Due to their large amounts, inflation resulted leading to even greater effect on the poorer population due to the high prices of goods. They also affected the exports of the country as they could not compete effectively in the international market. The government also undertook a policy that ensured high taxation of domestic production a factor that further increased the prices of these products. This was particularly felt in Castile due to the high tax burden. As a result, the population in this nation reduced with over one million people by mid-17th century due to high rate of emigration with areas like Castile where most of the population was located experiencing the highest effect.

During this economic stagnation, the Spanish workers were forced to seek for jobs in other nations like Germany where they would bring their resources to their country. This is because beside their country facing economic stagnation, the government had greatly reduced the wages of most workers thus making them opt to seek employment elsewhere. The colonies that Spain had acquired took the advantage of the crisis that the country was facing due to the effects of war and economic stagnation to proclaim their independence. This saw most Spanish colonies becoming free making the nation remain with only Cuba and Puerto Rico as the only colonies that Spain possessed by 1825. The period between 1822 and 1898, Spain economy was heavily dependant on agricultural products. Industrialization was also taking root in Catalonia and Basque Country with construction of railways to alleviate isolation in interior region. However, lack of political stability as a result of unstable government made the economic progress slow in these regions.

Towards the beginning of the 20th century Spain was still a more rural country than an urban country. This is because the only industry that existed was in the textile mills in the region around Barcelona in Catalonia and Basque provinces. Spain loss of colonies like Cuba and the Philippines was beneficial. This is because the capital could now redirected to the domestic industries which had been neglected due to the adoption of mercantilism philosophy which had led to increase of tariffs on manufactured goods. However, the agricultural productivity was still low due to lack of modern technology, difficult terrain, a climate that was not reliable for agriculture and poor infrastructure among other problems. Lack of development on the financial institutions of the country was another factor that slowed the economic recovery. This is because The Bank of Spain was still privately owned with its public functions left to only provision of funds for state activities and currency issuance only. Due to the state limiting itself to the activities of maintenance of order and justice, other activities that had impacts on the economy were left unattended. These are activities like building of effective infrastructure, provision of good education and other welfare activities among others. This is because according to mercantilist policy investing in the education of the whole population was viewed as an act that would lead to development of a vice and laziness that would be dangerous to the economy. Spain was also greatly affected economically by its civil war. This is because the country was divided into two separate centralized economies. This is where most of the economy was focused on the war industry due to the government huge investment in this area. This made it hard for the government to implement various reforms that had been proposed including the important land reforms (Watkins Thayer, 2010). As a result, there were consistent public unrests that were seen through the many mass actions and also this led to stagnation of the country’s economy. Spain economy had been hit by various activities that the political scene was facing in addition to decline of influx in precious metal making it deteriorate steadily since the reign of Philip II. The colonization of the Spanish Empire and its participation in several wars that had been a burden to the economy had also participated in the decline of this nation. The country’s adoption of the mercantilism philosophy in its economy where Spain mainly restricted its trade activities to its colonies only had a great impact on the economy of this nation. This is because after Spain emerged from its civil war which had made it loose most of its colonies, most of the country’s neighbors did not want to include it in the multilateral recovery programs or even to undertake trading activities with the country. As a result, the already depleted economy remained isolated thus, making it even more difficult to rise again. The view by its neighbors as an outcast made the nation to result to an economic policy that involved self-sufficiency. The adoption of this policy was further fueled by advocacy from Spain’s economic pressure groups that had been in existence for over half a century due to the government adoption of policies that were not friendly to the people of this nation.

The effects of mercantilism philosophy could also be identified in the country’s economic backwardness that was greatly contributed by the devastation of the war and the trade isolation which was inevitable after Spain lost its colonies (Ekelund, Robert; Tollison, Robert, 1981). This was further worsened by the high inflation that the country was facing due to scarcity of food and failure in economic reconstruction which saw the country register a negative economic growth rate in 1940s. After an economic stagnation that lasted over a decade and witness by issues like the tripling of prices on essential commodities and widespread deprivation, the economy of the country slowly began to improve.

One economist who had a great influence on the philosophy of Spain is Adam Smith. During the period when mercantilism was the preferred ideal, Smith wrote his influential book entitled the Wealth of Nations which had a great influence on philosophy of Spain. This gave people the knowledge that gold was not different from other forms of trade that were used as a medium of exchange. Unlike the mercantilist misconception which had made Spain to become overprotective in the trade within its colonial empire and stagnating its economy through its focus on gold and silver, the wealth of nations proposed a way of production of goods and services that the individuals of a country really require. The change that would be efficient for Spain’s economy is diversification of its trade where it creates a good trade relationship with its neighbors in order to benefit from their markets. In addition, the country should revolutionize its economic policy where much emphasis in put on development of domestic industry through reduction of tariffs to encourage consumption of domestic products as a result of reduction in prices. With the end of colonial expansion, the country should involve itself with all nations in its trade deals and also invest in other exports through expansion of domestic industries. The government of Spain should also consider dealing with its high unemployment rates which emerged as one of the highest among the European community by late 1980s. This is due to low rates of wages among these workers which led to several strikes.

As a result of Spain adoption of a policy that has promoted increase in domestic investments in the last few decades, Spain has witnessed high economic growth. The recent move by the government to introduce a privatization program has also promoted the economic growth of this nation. The country’s decision to become a member of the European Union has also been beneficial to its trade activities This is because, its has ended the era of self-sufficiency and deprivation making it experience growth due to its participation in trade with other prosperous economies.