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  /  Market Outlook   /  Crisis? Better Times Ahead!!

Crisis? Better Times Ahead!!

For the ancient Greeks, “crisis” not only meant the end of something, but also the reorientation of the actors and a new beginning.

The Austrian economist Joseph Schumpeter emphasized the creative aspect of crises in his concept of “creative destruction”. Economic historians believe that with the profound economic crises of the past centuries, new basic structures and new interacting productive units often emerged. The plague radically changed the income and class structure of the late Middle Ages and accelerated the transition into modern times.

The First World War, gave the expansion of the system of social security new impetus and brought about the welfare state. After the Second World War, both should form the undisputed social model of the West – not least in view of the systemic competition between East and West.

With the First World War, the rise of the manufacturing industry continued, which was also characteristic for Western economies until the 1980s: mass production of consumer goods, mechanization of production, economies of scale, growth, redistribution in the welfare state and cooperation with the organized labour movement were components of the economic policy paradigm of this era.

The oil price shock, the beginning microelectronic revolution, but also scientific and political efforts aimed at reducing the welfare state, as well as the end of the Cold un in the eighties. Nevertheless, movements and counter- movements often mix here, and the economic and socio-political developments in Europe have been approached differently in the European country blocks

The progressive north of Europe heralded equality of its population, independent of their location in each country. The South, including Spain, focussed on infrastructure and high margin production. In the Spanish case leading to a high percentage of construction and so real estate in its widest sense and tourism as percentage of economic output. So, what happens next in Spain after Covid ceases?

To be continued…

Ivo Kratschmer & Pablo A. Anderson

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