The Spanish Socialist Party and the modernisation of Spain

By Paul Kennedy

This book considers the most electorally successful political party in Spain, the Spanish Socialist Workers’ Party (PSOE), which was in government for two of the three decades since it won office under Felipe González in 1982. Providing rich historical background, the book’s main focus is on the period since General Franco’s death in 1975. It charts Spain’s modernisation under the PSOE, with a particular focus on the role played by European integration in this process. Covering events including the 2011 general election, the book is one of the most up-to-date works available in English and will be of great interest to academics and undergraduate and postgraduate students in the field of Spanish and European studies.

• Language: English
• Publisher: Manchester University Press
• Release date: Nov 1, 2015
• ISBN: 9781526102904

Paul Kennedy

Paul Kennedy is Professor of History and Director of International Security Studies at Yale University and author of the international best-sellers, ‘The Rise and Fall of the Great Powers’ and ‘‘Preparing for the Twenty-First Century’.

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Introduction

When the Spanish Socialist Workers’ Party (Partido Socialista Obrero Español – PSOE) lost office in November 2011, obtaining its lowest number of parliamentary seats since democracy had been re-established in the period after Franco’s death in 1975, it faced an uncertain future. Spain’s most electorally successful political party, the PSOE had won six of the eleven general elections held since 1977, been runner-up in the remaining five, and had been in government for two of the three decades since the party first entered office in 1982. Moreover, the PSOE is a party with a long history of which it is intensely proud. Founded in 1879, the PSOE has historically been concerned with ending Spain’s chronic historical backwardness and isolation and securing a place for the country as an equal alongside its European neighbours. From its founding father, Pablo Iglesias, to its current leader, Alfredo Pérez Rubalcaba, the party has been guided by a progressive, modernising project which, during its history, has led to episodes of repression which threatened the party’s very existence.

In the period during and after the Civil War, the PSOE paid a high price for its prominence as the largest political party on the left of the political spectrum throughout the Second Republic (1931–36). When Franco died, the PSOE was more a historical memory than a credible party of government. It nevertheless recovered to play a key role in Spain’s transition from dictatorship to democracy, establishing itself as the country’s chief opposition party at general elections in 1977 – the first held in over forty years – and 1979. Throughout its long history, the PSOE had been notable for a pragmatic practice which belied its often radical discourse, and Felipe González was able to reposition the party as a moderate force capable of filling the gap left by the disintegration of the party which had guided Spain through its transition to democracy, the Democratic Centre Union (Unión de Centro Democrático – UCD), and gain the support of an electorate which stretched beyond the party’s working-class base. Given the UCD’s collapse and the fact that Spain had experienced a failed coup d’état the year before the PSOE’s general election victory, it is no exaggeration to suggest that the survival of democracy depended on the unified, disciplined force which the PSOE had become under the undisputed leadership of González.

It was modernisation achieved through the instrument of European integration which formed the basis of the party’s programme in government rather than any overt appeal to traditionally Socialist goals. Asked at the beginning of his premiership what his aim was, González replied, ‘que España funcione’ – ‘to make Spain work’. The transformation of the country under the PSOE was swift. Before the end of the party’s first term in office, membership of the European Community had been secured, and a referendum had been held which found in favour of Spain remaining within NATO. During most of the party’s second (1986–89) and third (1989–93) terms in office Spain enjoyed the highest average rate of economic growth in the European Community as the country became a magnet for foreign investment. Growth was used during this period by the Socialist government to transform Spain’s insubstantial welfare state into an institution on a par with that of its neighbours as the country began to enjoy levels of health, education and social services which had long since existed throughout most of the rest of Western Europe. Moreover Spain was able to secure an enhanced profile for itself in the three key areas of Spanish foreign policy concern, the European Union (EU), Latin America and the Mediterranean. Progress was also made on consolidating the so-called ‘State of the Autonomies’, Spain’s system of devolution to its seventeen autonomous regions,

By this stage, Spain was able to show the world that it had thrown off the stagnant authoritarianism of the Franco dictatorship. The image presented at the Barcelona Olympics and the Seville Expo in 1992 was that of a vibrant, confident, prosperous country finally at ease with itself. The glamour of Spain’s annus mirabilis nevertheless also marked the start of a brief, but intense, recession which threatened to exclude Spain from the single currency project designed at Maastricht. The economic downturn placed in question the economic credibility of the government, whilst the implication of party figures in corruption allegations simultaneously eroded the government’s political credibility.

Despite the difficulty of meeting the Maastricht convergence criteria within a context of economic recession, the PSOE government’s support for the European project never wavered, regardless of the related political cost as public spending was slashed. Although the party was able to secure a fourth and final term in office under González (1993–96), albeit for the first time without an overall majority, the PSOE approached the 1996 general election with little hope of victory. Exhausted by having been in office for over thirteen years, unable to meet a single one of the Maastricht convergence criteria, and exposed as having participated in acts of corruption ranging from illegal party finance to the organisation of death squads tasked with kidnapping and killing suspected Basque terrorists, the PSOE was dislodged from office by the narrowest of margins, just over 1 per cent of the vote. For all its failings, the PSOE had retained the support of a surprisingly loyal electorate.

With the benefit of hindsight, the narrowness of the PSOE’s defeat lulled the party into a false sense of security about the seriousness of the changes required to enable a return to government. The replacement of Felipe González after his resignation from the leadership in 1997 proved problematic and the party obtained its worst result in over two decades in 2000 when it obtained just 125 of the 350 seats in the lower house of parliament, the Congreso de los Diputados (Congress of Deputies). With Spain once again enjoying economic growth well above the EU average and the government of the Popular Party (Partido Popular – PP) under José María Aznar disproving those who had suggested that it would be high-handed and authoritarian, the electorate had been happy to endorse the government with the overall majority which it had been denied in 1996. Paradoxically, receipt of an overall majority led to the start of a process which would culminate in the party’s defeat in 2004. Imposing unpopular labour market and education reforms, the PP government also gave its backing to the US-led invasion of Iraq in 2003, despite the opposition of the vast majority of the Spanish population. More than any other issue, Iraq provided the new PSOE leader, José Luis Rodríguez Zapatero, with his opportunity to enhance his own and the PSOE’s profile within the Spanish political arena. Narrowly elected General Secretary at the PSOE’s 35th Congress in July 2000, shortly after the general election, Rodríguez Zapatero had made slow progress as leader of the main opposition party, but was able to bring about a degree of unity within the party which had been notably absent throughout the previous decade. Moving on from the González era, Rodríguez Zapatero personified a generational and programmatic shift which was ultimately capable of returning the PSOE to office in 2004.

Although critics suggested that Rodríguez Zapatero owed his victory to the particular circumstances in which the 2004 general election took place – just three days after Al-Qaeda terrorist attacks caused the deaths of nearly two hundred people on commuter trains in Madrid, an event which was generally viewed to have been bungled by the PP government with respect to news management – Rodríguez Zapatero’s government proved sufficiently popular to obtain re-election in 2008. With the economy still thriving throughout the PSOE’s first term in office – above-EU-average growth continued to characterise the Spanish economy throughout this period – Rodríguez Zapatero opted for continuity with regard to economic policy. With the economy geared towards a booming construction sector which provided the government with ample tax revenues, the PSOE government was able to boast a set of economic indicators which were amongst the best in the EU. Public debt fell below 40 per cent, whilst there was a surplus in the public accounts. Spain’s chronic unemployment problem also appeared to have been addressed, with an unemployment rate of 8 per cent dropping below the EU average during the course of 2007.

Given such apparent success, it is not surprising that Rodríguez Zapatero looked beyond the economic sphere in terms of policy innovation. Civil and gender rights were transformed under his leadership, with legislation on domestic violence, equal rights between men and women, gay marriage and adoption being prominent achievements. Rodríguez Zapatero also boldly put an end to the Pacto de Olvido (Amnesia Accord) which had characterised the post-Franco period, a tacit agreement not to address the injustices of the dictatorship. State support was given to victims of the dictatorship, including financial assistance to the families of those who had suffered at the hands of the regime. This aid included assistance in the search for the remains of those killed by the regime and dumped in unmarked graves. Traditional social democratic concerns such as welfare were also attended to, most prominently in the form of a Dependency Law which provided state aid to those dependent on carers.

Rodríguez Zapatero’s period in government is nevertheless not likely to be remembered for legislation in the area of civil and gender rights, or even the Dependency Law, but rather for its handling of the crisis suffered by the Spanish economy throughout most of the PSOE’s final term in office (2008–11). Spain’s economic growth model had been overly dependent on construction and the progressive collapse of the sector from late 2007 destabilised the entire economy. The harm done to the PSOE government’s credibility was significant. Initially denying the gravity of the situation – for instance, there was a marked reluctance on the part of the government to use the term ‘crisis’ and pledges were made that Spain would not have to introduce the kind of austerity measures which would make it easier and cheaper to lay employees off– the government belatedly acknowledged that the county was facing its worst economic situation in eighty years. Despite the implementation of one of the largest fiscal stimulus programmes in the world, the economy continued to deteriorate and the government had to go back on many of the pledges it had made in order to address the situation. Fiscal stimulus was replaced by successive austerity packages by the end of 2009 and May 2010 marked a historic turning point as the government was forced by the EU to slash the salaries of civil servants, freeze pensions and impose cuts throughout the public sector in order to reduce a deficit which had spiralled to 11 per cent of GDP by the end of 2009. Meanwhile, unemployment edged inexorably towards five million.

The government’s defeat at the general election held in November 2011 was hardly surprising, nor was its scale. In seeking to meet the EU’s targets on deficit reduction the PSOE government under Rodríguez Zapatero effectively became unelectable. Rodríguez Zapatero himself had announced in April 2011 that he would not be standing for a third term as premier. By now viewed as a liability to his party and government, he agreed to remain Prime Minister until the general election, which, in July, he declared would be brought forward three months. The former Interior Minister and First Deputy Prime Minister, Alfredo Pérez Rubalcaba, accepted the poisoned chalice of leading the party into the election, and despite the party’s poor result at the general election, he was endorsed as Rodríguez Zapatero’s successor as PSOE General Secretary at the party’s 38th Congress in February 2012.

In his state of the nation address to the Congress of Deputies in July 2010, Rodríguez Zapatero had announced that in order to address the worst economic crisis in decades he would take all necessary measures, however difficult they might be. Moreover, he would do so ‘whatever the personal cost’. The 2011 general election result indicates that he was as good as his word, although blame for the government’s actions went beyond the figure of the Prime Minister to the party itself. Many of those who had previously voted for the PSOE were left feeling that they had been abandoned by the government. Rodríguez Zapatero’s personal responsibility for this situation was considerable. He had been able to impose a level of dominance over the party and government which not only discouraged criticism from within his own ranks, but which, during his first term, led him to display a level of self-confidence which proved fatal once boom turned to bust during his second term. Precious time was lost when, instead of acknowledging the intensification of the crisis, the government sought to deny that any such crisis existed, despite ample evidence to the contrary. When austerity measures were eventually introduced, the government failed to explain clearly why it had acted as it did, why it believed its actions to be in the national interest and what the consequences of its failure to act would have been.

There was a sense in which the 2011 general election marked the end of an era. No longer the dominant political force within Spain, the PSOE was forced to adapt to a reduced status in which its very capacity to mount an effective opposition to the incoming PP government was in question. It remains to be seen whether the PSOE is once again capable of the kind of reinvention which has characterised the party throughout its history.

The chapters which make up this book consider the above issues in greater detail.

Chapter 1 considers the PSOE within the context of social democracy and the dilemmas facing social democratic parties in the contemporary era. Emphasis will be placed on the political environment in which the PSOE operated and the constraints which conditioned its actions. The tension between pragmatism and ideology serves as a backdrop to the chapter.

Chapter 2 provides an overview of the PSOE’s history, from the party’s foundation in 1879 to its victory at the 1982 general election. The emphasis is on establishing the ‘character’ of Spanish Socialism so as to place in context its actions in office and opposition.

Chapter 3 focuses on Spain’s relations with the European Community up until membership was achieved under the PSOE in 1986. The justification for including this material is that the PSOE – historically considered to be Spain’s most ‘European’ political party – considers the securing of Spain’s membership of the Community to be one of its greatest achievements in office. The imperatives imposed by European integration underpinned the PSOE’s policies throughout its entire period in government. Moreover, given that ‘Europeanisation’ became almost interchangeable with the term ‘modernisation’ in the party’s discourse under González, this level of detail appears apposite.

Chapter 4 considers economic policy under the premiership of Felipe González. The PSOE’s claims to have brought about Spain’s modernisation rest upon the economic transformation of the country which took place during this period. Coverage of public spending on the welfare state and infrastructure are also be included in the chapter. Given that the economic credibility of the government was to a degree undermined by the simultaneous loss of political credibility linked to myriad corruption allegations relating to the PSOE, the chapter also contains a section considering the phenomenon of corruption and its significance for the party.

Chapter 5 is an examination of foreign and security policy during the party’s period in office under González. Particular attention is given to the three chief axes of Spanish foreign policy concern – the EU, Latin America and the Mediterranean – together with a consideration of the significance of the issue of Spain’s membership of NATO.

Chapter 6 is devoted to one of the key aspects of Spain’s modernisation over recent decades, the issue of devolution of power from central government to Spain’s regions. The chapter provides information on the previous UCD government’s handling of the issue before consideration is given to the PSOE government’s initiates during its period in office under Felipe González.

Chapter 7 considers the PSOE’s period in opposition between 1996 and 2004 and links the material covered in the previous chapters to the more recent period during which the PSOE was led by José Luis Rodríguez Zapatero.

Chapter 8 analyses the question of whether the PSOE’s period in office under Rodríguez Zapatero can be characterised by a distinctive ideology. Given the constraints on political parties in the contemporary era with respect to economic policy – and most particularly, for our purposes, the constraints on social democratic parties – parties have looked beyond the economic field in order to differentiate themselves from their political opponents. The chapter examines the degree to which ideology was employed to differentiate the PSOE under Rodríguez Zapatero from the party under González. The chapter will consider the theoretical and philosophical influences claimed by Rodríguez Zapatero and includes coverage of policy in the following areas: the protection and extension of civil and gender rights, including the Dependency Law; historical memory; and constitutional affairs, including reform of regional autonomy statutes

Chapter 9 is concerned with the issue of foreign and security policy under Rodríguez Zapatero and will consider his decision to withdraw Spanish troops from Iraq immediately after the PSOE’s general election victory in 2004.

Chapter 10 examines the question of economic policy under the PSOE between 2004 and 2011 and the degree to which the Rodríguez Zapatero government’s handling of the economic situation contributed towards the party’s general election defeat in November 2011.

Chapter 11 draws the book to a close with an overall conclusion, and is followed by an Appendix, containing information on party organisation, membership and general Election results.

1

The PSOE and social democracy

It is important that this book on the Spanish Socialist Party starts with a theoretical discussion of social democracy since the 1970s, when the PSOE went from being a marginal political force to become a viable party of government. The aim is to establish the PSOE’s position and draw lessons from the experience of one of Europe’s most electorally successful social democratic parties over recent decades. Amongst Europe’s oldest social democratic parties, the PSOE was able to establish itself as the most significant political party during the Second Republic (1931–36), and historical memory played a significant role in the PSOE’s re-emergence following Franco’s death. Although the party shrank to near-irrelevance during the dictatorship, its virtual re-establishment under the leadership of Felipe González enabled it, firstly, to secure and consolidate a dominant position within the Spanish left, secondly, as the country’s chief party of opposition, to establish itself as a credible party of government, and thirdly, to retain office at four successive general elections between 1982 and 1993.

Although, within the context of an economy in recession and a seemingly never-ending stream of party-related corruption allegations, the PSOE lost office in 1996, finding the transition from office to government challenging, a renewed party leadership under José Luis Rodríguez Zapatero was able to secure consecutive general election victories in 2004 and 2008. Despite faring badly at the 2011 general election, the PSOE was still far and away Spain’s most electorally successful political party.

It is important to place any study of the PSOE’s experience with respect to social democracy within the broader dilemmas facing social democratic parties in the ‘post-material’ world (Heywood, 1995a: 229). The literature on the challenges facing social democratic governments with respect to the prosecution of an autonomous national economic policy is considerable (see, inter alia, Gray, 1996, 1998; Giddens, 1998, 2002; Cuperus et al., 2001). Constraints include globalisation (especially of the financial markets); Europeanisation of product markets; the existence of an independent European Central Bank with a monetarist statute; high national indebtedness; demographic shifts; heterogenisation of the social structure; individualisation (values, lifestyle etc.); and increasing voter volatility (Merkel, 2001: 36). The end of the post-war boom, and the fact that lower economic growth rates rendered impossible the pursuit simultaneously of policies that reduced inequality, raised living standards and fitted the needs of capitalist accumulation have also been advanced as an explanation for why social democrats have adopted neoliberal policies since at least the 1980s (Lavelle, 2009: 9).

Moreover, although countries throughout the world, reacting to the scale of the international financial and economic crisis of 2008, were quick to apply Keynesian-style prescriptions, demand management was ultimately put back in the policy locker, supplanted once again by a neoliberal approach which had brought the developed world to the edge of the precipice. As Sevilla (2011: 432–3) has argued, the experience of the crisis has not led to the EU reconsidering its stance with respect to the functioning of the economy in general and that of monetary union in particular. Much less has it persuaded the EU to embrace the concept of a lack of aggregate demand and it has not advocated the implementation of compensatory public policies. If a company cannot sell its products, the problem is always one of lack of competitiveness, rather than lack of demand. Consequently, the way to avoid an increase in unemployment is not by stimulating public demand, but rather by improving levels of competitiveness. Similarly, the foreign deficits of eurozone member countries can only be corrected by improving competitiveness so as to stimulate export growth. Competitiveness can only be improved by cost reductions.

Market liberalism, deregulation, the central role played by finance within national economies – all viewed as being key elements in the apparently irresistible phenomenon of globalisation – were likely to have more of a future than the interventionism which had only been temporarily applied in order to prevent the collapse of the international banking system and economic meltdown.

When the PSOE entered office in 1982, in common with other social democratic parties throughout Europe it was confronted with the reality that traditional egalitarian tools such as Keynesian-style demand management, state ownership and mass public provision were all under challenge to a greater or lesser extent. The practical realisation of ‘socialism’ was placed on hold as a utopian goal which could be achieved only through the foundation of economic ‘modernisation’ via European integration. The use of European integration as a strategic option for modernising Spain became the key policy of the PSOE government; ideology was secondary to pragmatic management of the economy (Heywood, 1995a: 198, 225, 229). Others have similarly highlighted the PSOE leadership’s emphasis on pragmatism and realism, rather than ideology, social democratic or otherwise (Gillespie, 1989: 402–3).

Felipe González – to the chagrin of some in the party – was happy to adopt Deng Xiaoping’s aphorism, indicating that ‘it doesn’t matter if the cat is black or white, as long as it catches mice’. The ends justified the means, even if those means bore little resemblance to traditional social democratic precepts. Essentially, the party’s aims were viewed in terms of accepting the challenge of consolidating Spanish democracy whilst at the same time bringing Spain up to the level of its European neighbours, socially, economically and politically. European integration provided the fundamental framework for this transformation, ranging from the industrial reforms required to allow Spain to be accepted as a member, to the constraints provided by the Maastricht convergence criteria, and, subsequently, the Growth and Stability Pact. Socialist transformation was side-lined. The party’s frequently expressed aim of bringing about Spain’s ‘modernisation’ captured the essence of its objectives.

It has been argued that those writers who labelled the PSOE’s economic policy orientation as neoliberal (Share, 1988; Petras, 1993) ought, rather, to have viewed the party’s stance as a pragmatic response to an international context over which the Socialists had little control (Heywood, 1994a: 1; 1995: 227). The economic foundations of social democracy had effectively been demolished by the global freedom of capital (Gray, 1996: 26). The degree of manoeuvre available to social democratic parties was therefore viewed as being highly circumscribed.

With neoliberalism in the ascendency, emphasis was placed on the market as an efficient mechanism for the distribution of resources and the opening of economies to international trade and competition. Priority was awarded to the control of inflation, the deregulation of economic activity and balanced budgets. Such has been the supremacy enjoyed by these precepts that they have become just as much features of social democratic economic policies as they are of conservative policies. It is argued that there is now only one viable economic policy, and that economic management is either effective or ineffective, rather than being left-wing or right-wing (Maravall, 2009: 255; Sevilla, 2011: 454).

Others have nevertheless contested this view, arguing that constraints did not prevent the González government from implementing a set of economic policies in line with the party’s social democratic ideological preferences. Taxes were increased by a third whilst the public sector was used to develop the most extensive capital formation plans in Europe in the 1980s (Boix, 1996: 24). By the early 1990s, health care provision had been extended to the entire population, with Spain boasting the highest proportion of doctors per head of population of all OECD countries. Pension rights were similarly universalised, spending on education rose five-fold during the decade 1982–92 and the amount spent by the State on unemployment benefits more than doubled in terms of percentage GDP. Total public sector spending accounted for around 50 per cent of GDP in 1995, around half of which was accounted for by outlays on the welfare state, in line with the EU average (Kennedy, 1997: 98–9).

Similarly, during the first decade of the twenty-first century, the PSOE government under Rodríguez Zapatero was able, prior to the economic downturn, to put in place significant social democratic achievements, including a Dependency Law, passed in November 2006, which guaranteed state assistance to elderly people and those suffering from severe disabilities, including mental illness. Such was the significance of the initiative that the government described it as the ‘fourth pillar’ of the welfare state, joining existing provision in health care, education and pensions. A further indication of the government’s social democratic policy credentials was the fact that those on the lowest incomes enjoyed the largest percentage decrease in their income tax contributions between 2004 and 2008, whilst social expenditure accounted for half of the 2008 budget. These achievements are considered in greater detail in Chapter 10.

The case of Spain under the PSOE thereby appears to bear out the hypothesis that political parties can still exert a major influence on a country’s economic policy. As Pierson argues, ‘there are still choices to be made – even if these have become more expensive or more difficult to mobilize’ (Pierson, 2001: 88). Furthermore, there has been criticism of the view that globalisation ‘imposes’ neoliberal policy agendas on social democratic governments, in that it ignores how the influence of the processes of globalisation is mediated by domestic institutions, and the actors working within them (Clift, 2003: 211).

A further issue within the debate on social democracy is the need to acknowledge that although social democratic governments are subject to a number of the same significant international constraints, domestic factors play a key role in shaping national social democratic agendas and the way in which they are put forward (Cowell and Larkin, 2001: 108). Furthermore, new political orientations and drastic sociological changes within social democratic parties have generated new patterns which reflect the diversity of socio-political issues each party faces in its own national context (Marlière, 1999: 14). As Marquand reminds us, ‘social democracy is, by nature, heterogeneous. There has never been a single social democratic orthodoxy, and it would be astonishing if one were to develop in this time of bewildering flux. Now, even more than in previous decades, it is wiser to think of social democracies than of social democracy’ (Marquand, 1999: 10). Social democracy can no longer be confined to national economies and national economic management. Some greater degree of diversity is required (Gamble and Wright, 1999: 5).

Concerned about electability, social democratic parties have sought a broader base in ‘progressive’ opinion, leading them to adopt a ‘citizenship-focused’ discourse, indicating the degree to which social liberalism has influenced social democracy (Pierson, 2001: 59). Under González, PSOE governments shared the social democratic concern with equality and non-discrimination in the exercise of citizenship rights; emphasis was placed on the expansion of social policies, rather than on traditional – and increasingly outdated – social democratic policy preferences such as the extension of public ownership (Maravall, 1992: 25). This approach continued under Rodríguez Zapatero, who commented:

My socialism is not of the old ‘tax and spend’ variety, i.e. where there is unlimited public spending paid for by tax increases. Nor is it the socialism of a state with numerous public sector companies in areas where private initiative obtains better results. Nor am I, as regards the day-to-day functioning of the economy, a supporter of government meddling in companies’ activities. I think that it is necessary to establish a set of clear and transparent rules for companies, and that public finances should be managed rigorously. (Calamai and Garzia, 2006: 83)

Similarly, in an interview which he gave to the Spanish newspaper, El Mundo in April 2006, Rodríguez Zapatero described his vision of social democracy in the following terms:

A modern left’s programme is based on a well-managed economy with a surplus in the public accounts, moderate taxes and a limited public sector. All of this accompanied by the extension of civil and social rights. (Quoted in Maravall, 2009: 254)

The tax burden barely changed under the PSOE’s first term in office. The top rate of tax was reduced by 3 per cent and the threshold of each tax band was raised only slightly (Maravall, 2009: 255).

Marquand, writing about the UK, comments that the concept of a new intellectual and political paradigm combining insights from traditional social liberalism and traditional social democracy emerged during the early 1990s based on the work of individual writers such as Will Hutton and Ralf Dahrendorf and organisations such as Charter 88. Although he describes it as being ‘inchoate, and in places distinctly fuzzy’, Marquand (1999: 13–14) identifies five key features:

•  It was broadly liberal in politics, but broadly social democratic in economics.

•  It was for capitalism against socialism, but implied profound changes in the architecture of British capitalism and a concomitant challenge to powerful corporate interests.

•  Although drawing on American academic writing, its vision of the political and moral economy was much closer to those of mainland Europe than to the United States.

•  It was pluralistic, implying a multiplicity of power centres, economic and political.

•  It rejected the notion of a single modern condition to which there is a single route.

Marquand notes that Blair’s New Labour rejected the paradigm, arguing that its own methods constituted ‘the sole path to the future’. The paradigm nevertheless displays broad similarities with the kind of ideological underpinning which the PSOE, under the leadership of Rodríguez Zapatero, sought to provide for the Spanish variant of social democracy. Rodríguez Zapatero and members of his immediate circle have readily acknowledged their debt to US academics such as John Rawls and Benjamin Barber, and the Princeton-based Irish academic, Philip Pettit.

The constraints on economic policy nevertheless remained considerable and the long boom enjoyed by the Spanish economy between the mid-1990s and 2008 served to dissuade Rodríguez Zapatero’s government from introducing significant changes in the country’s economic growth model. Given the buoyancy of the economic inheritance left by his PP predecessors in government, it is understandable that Rodríguez Zapatero pragmatically opted to implement a policy which broadly remained within the parameters established under José María Aznar between 1996 and 2004. Enjoying a surplus on the public accounts throughout almost his entire first term in office at a time when significant public deficits were the norm throughout the EU, and with public debt being comfortably below the EU Growth and Stability Pact’s 60 per cent of GDP limit, any major shift in policy might even have appeared foolhardy. Moreover, Spain’s chronic unemployment rate was on a downward trend, and Spain accounted for a good proportion of the job creation within the EU. Innovation in the economic policy field therefore appeared to be unnecessary.

Although the PSOE’s manifesto at the 2004 general election was critical of the prominent position played by the housing sector, highlighting ‘the current risks concerning the Spanish economy, which is highly indebted and geared towards bricks and mortar’ (PSOE, 2004a: 104), Rodríguez Zapatero did little when in government after 2004 – particularly during his first term, when the economy boomed – to replace Spain’s construction-based economic model with an alternative approach more geared towards addressing structural weaknesses within the economy and improving economic competitiveness. Such solutions were only proposed after boom turned to bust.

Ultimately, the economic downturn, which hit Spain particularly badly, and the government’s response, which was viewed by much of the population as being tardy, inconsistent and devoid of strategic vision, effectively condemned the PSOE to defeat at the 2011 general election. The Calvary of the PSOE’s final term in office under Rodríguez Zapatero between 2008 and 2011, when his government implemented a series of economic austerity measures designed to stave off the kind of bail-out previously visited upon Greece, Ireland and Portugal, saw the government’s popularity plummet. As we have seen, the party obtained a historically poor result at the 2011 general election.

The PSOE therefore provides an example of a social democratic party which appeared to have little margin available to respond to the challenges posed by the international economic downturn from 2008 in a recognisably social democratic fashion. Although, in line