The twentieth century

In Spain, the early decades of the twentieth century saw an incipient renovation of economic studies carried out by Antonio Flores de Lemus, Jose Maria Zumalacarregui, and Francisco Bernis.

The reception given to foreign economists in the first half of the century was fluid, ranging from marginalism (Stackelberg taught in the above-mentioned Madrid faculty created in 1943) to Keynesianism, which was not always well received by highly qualified economists such as Manuel de Torres or Luis Angel Rojo. In the second half of the twentieth century — when the economy was emerging from a long period in which it was closed to the outside, from 1890 till the 1940s — there was an important flow of economic ideas imported from the United States, with the adoption of a great variety of schools of thought with different ideologies and methodological approaches. These ranged from the institutionalists to the Chicago and Austrian schools, from Keynesianism and neo-Keynesianism to the new classical macroeconomics, from mathematical economics to new approaches to human behavior, and from public choice theory to the political economy of regulation.

Spanish economists were also receptive to the ideas put forward by other European eco­nomists, mainly from Germany (Ropke and the members of the Freiburg School such as Eucken), France (Perroux and planning economists), and Italy (Einaudi), as well as from Latin America (Raul Prebisch, Celso Furtado, and the economists associated to the Economic Commission for Latin America). This importation of theories, doctrines, and policy orientations was produced by means of translations, the reading of works in the original language, a brain drain to foreign universities, and the presence of some of the most important foreign economists in Spain. An identical movement of transmission and adaptation of ideas and recommendations in political economy occurred in Portugal throughout this period.

All the facts mentioned gave rise to a consolidation of economics in the second half of the twentieth century, both in Spain and Portugal, not only as a university discipline but also as a profession. Economists gave proof of their professional expertise by participating in the integration and assimilation processes undertaken by the Spanish and Portuguese economies, from the early stages of the opening up and reform of institutions at the end of the 1950s to the formal entry into the European Union in 1986.

After integration the most important challenge for Portuguese and Spanish economists has been the adherence of both countries to the European Monetary System and their permanence in the Euro. Before 2002 opinion leaders were able to persuade the public sphere on the advantages of belonging and accepting the European rules and targets on inflation, public debt, and budget deficit. However, in the aftermath of the 2008 crisis, it has been difficult to explain the rigorous austerity and recession measures imposed by the European Union, the European Central Bank, and the International Monetary Fund, especially in the case of Portugal. The economists’ inability to explain the causes of the crisis and the measures to be implemented to overcome it contributed to the negative reputation of those who were supposed to provide answers and solutions. It is nevertheless clear that the economics profession is not to be blamed for the consequences of the Great Recession initiated in 2008. In this sense, the process of diffusion and assimilation of economic theories and practices has been sustainable enough to produce a general framework of understanding and a common language and precepts guiding discussion and decision making in international contexts.