New means to old ends? The social democratic politics of financial reform in France and Spain (1981-1996)

Crespi de Valldaura, Virginia (2025) New means to old ends? The social democratic politics of financial reform in France and Spain (1981-1996). PhD thesis, London School of Economics and Political Science.

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Abstract

This dissertation seeks to answer the question: why did the Left engage in financial liberalisation reforms since the 1980s? Existing accounts of the politics of financial liberalisation have focused on external constraints, notably capital flight or currency speculation, that forced them to abandon their ideological commitments and converge on pro-capital reforms; on the rise of influence of orthodox economists within Left parties; or on the expansion of credit to resolve distributive conflict. This leaves unanswered how Left parties could hope to win over their constituencies if they broke radically with social democratic policy goals. This thesis argues that financial reforms were an attempt by social democratic parties to build a new ‘growth model’ after Keynesian recipes for growth and employment had stopped working. Rather than a radical paradigm change, reforms constituted ‘second order change’ (Hall, 1993), whereby policymakers change the instruments to pursue old objectives, such as full employment and raising living standards of lower income strata. The thesis examines the cases of the governments of the Parti Socialiste in France and the Partido Socialista Obrero Español in Spain from the early 1980s to the mid-1990s. Both parties pursued financial liberalisation but reform trajectories varied with the policy imperatives of the parties. In France, the aim of restoring productive investment tried to create a “finance-led growth model”, whereby savings mobilised for investment would in turn generate returns for a wide class of “popular shareholders”. In Spain, an obsession with anti-inflationary priorities tried to limit public spending, which was seen as inflationary. Financial reform thus tried to boost welfare-substituting instruments such as private pensions. In both cases, these reforms continued to be defended even when they did not result in broad-based benefits, as reformers believed that taking “corrective action” within the new growth model would suffice to fulfil their original social democratic objectives.

Item Type:	Thesis (PhD)
Additional Information:	© 2025 Virginia Crespi de Valldaura
Library of Congress subject classification:	H Social Sciences > HG Finance H Social Sciences > HX Socialism. Communism. Anarchism J Political Science > JF Political institutions (General) J Political Science > JN Political institutions (Europe)
Sets:	Departments > European Institute
Supervisor:	Hopkin, Jonathan and Fairfield, Tasha
URI:	http://etheses.lse.ac.uk/id/eprint/4871

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