Academic journal article Journal of Urban and Regional Analysis

The Urban Bubble Process in Spain: An Interpretation from the Theory of the Circuits of Capital

Academic journal article Journal of Urban and Regional Analysis

The Urban Bubble Process in Spain: An Interpretation from the Theory of the Circuits of Capital

Article excerpt

Introduction

Urbanization means demographic growth, economic concentration, a particular way of life, and the artificialization of land - a process that entails removing soil, leveling, parceling and urbanizing. This process is of interest because it allows for an analysis at different scales (Piñeira Mantiñán 2010). This is the reason why ever since the real estate bubble in Spain began showing alarming signs, and after it burst in 2008, numerous geographers have studied the phenomenon and analysed its impact on the worsening of our nation 's economic-financial crisis (Bellet Sanfeliu 2007, Brandis García 2007, Burriel De Orueta 2008, Murray Mas and Blázquez Salom 2009, Ocaña Ocaña 2009, García 2010, Piñeira Mantiñán 2010, Romero 2010, Gómez Moreno 2011, Lois González and Piñeira Mantiñán 2011, Troitiño Vinuesa 2011, Rullán Salamanca 2012, Charnock et al. 2014).

Most studies involve regions where speculative urban growth was most intense (EEA 2010, Greenpeace 2010, Lois González and Piñeira Mantiñán 2011). Urban growth, in a process clearly described by classic authors (Harvey 1985, Marx 2000), has adjusted itself to the theory of the circuits of capital (Harvey 1985, Davies 1989, Rullán Salamanca 2012), by which excess capital in circulation is directed towards the secondary circuit of capital. Thus, the direct relationship between urbanization and the processes of capital accumulation is justified to the extent that if masses of fixed capital are mobilized for the construction of homes and large infrastructures, the advent of problems of excess capital are postponed. This explains the fact that while the construction sector in Spain made up 4.7% of GDP in 1997, ten years later this figure had risen to 9.3%, an increment which drove an unprecedented urban expansion financed by means of massive projects undertaken to satisfy a heterogeneous demand within the framework of an expanded concept of homeowners (Romero 2010, Rodríguez López and López Hernández 2010).

The real estate crisis in Spain has resulted in a general crisis. Extravagant land development and construction projects have ended up in default, bankruptcy or contraction of the companies. The urbanizing tsunami (Gaja i Diaz 2008) has destroyed the traditional system of savings and loan associations which were directly involved in the speculative financing of residential urbanization (Rullán Salamanca 2012). Consequently, the previous ease with which credit could be obtained has turned into strict restrictions, a noticeable increase in defaults, and a dramatic increase in the number of foreclosures.

In view of these factors, we might speak of a Spanish singularity within the global economic crisis emerged in 2008. A large part of the crisis in Spain emanated from the property sector: the collapse of a part of the financial system dragged down by the failing construction businesses; the thousands of families unable to keep up with their mortgage payments; rising unemployment, particularly among unqualified young people of working age previously employed in the public and private construction trades; the proliferation of vacant plots of land, and so on. In fact, the unique features of urbanization in Spain (Muñoz 2003, Méndez Gutiérrez 2013, Charnock et al. 2014) have afforded the crisis a distinctly property and mortgage-based slant: similar in some ways to what unfolded in the United States and Ireland (Aalbers 2009), but differing substantially from other examples of the crisis closer to home, such as France, Portugal and Italy. As it happens, and as indicated in a number of recent studies, innovation and creation does not feature heavily in the economic structure of most Spanish cities (Sánchez-Moral et al. 2014) and there are major differences in their production bases and in the structure of local job markets.

The extended crisis has developed into a model analysed in depth. This is the reason why this article investigates the subject. …

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