Dear Editor,

As one of those who dabbled in radical socialism in the 1970s, I viewed the overthrow of the democratically elected Marxist-orientated Chilean government of Salvador Allende by General Augusto Pinochet in 1973 as a huge historical setback for proletarian internationalism. Thus I applauded Pinochet’s final defeat in the referendum of 1990 and the barbarity of his 16 year rule allowed little room for sympathy when, as an old and sick man, he was dragged through the courts of multiple states.

It was pleasing to read (‘Chile should tout its passage to first world’ SN, 17.6.09) that notwithstanding its unfortunate past, Chile has flourished and is likely to be the first South American country to join the Organization of Economic Cooperation and Development, the exclusive club of the world richest countries.

Asked about the secret of Chile’s growth and poverty reduction, Juan Gabriel Valdes, head of the Chilean Image Foundation, (in the above mentioned article) claimed that  “it was largely political: the country’s ability to create a national consensus to pursue a market economy, democracy and social policy. Political stability and economic certainly attracted investments and that helped the country grow.”

The economic and social policies implemented by General Pinochet were extremely controversial. During his regime, the Nobel Prize-winning economist, Milton Friedman, and his group of free marketeering economists – the so-called ‘Chicago Boys’ – ruled the day. They declared success and the “The Chilean Miracle.” Robert Packenham and William Ratliff (What Pinochet Did for Chile) claimed that the “first country in the world to make that momentous break with the past – away from socialism and extreme state capitalism toward more market-oriented structures and policies – was not Deng Xiaoping’s China or Margaret Thatcher’s Britain in the late 1970s, Ronald Reagan’s United States in 1981, or any other country in Latin America or elsewhere. It was Pinochet’s Chile in 1975.”

On the other hand, there were many heretics. For example, Greg Palast (www.gregpalast.com) contended that Pinochet destroyed Chile, but did not do it alone. “After nine years of economics Chicago-style, Chile’s industry keeled over and died. In 1982 and 1983, GDP dropped 19%. The free-market experiment was kaput, the test tubes shattered. Blood and glass littered the laboratory floor. Yet, with remarkable chutzpah, the mad scientists of Chicago declared success.” According to Palast, at the end of the day it was “Keynes and Marx, not Friedman, that saved Chile.”  In the current world financial turmoil, this latter conclusion might instinctively appeal to some.

Yet in 1991, the first finance minister of the new democratic government, Alejandro Foxley, claimed that, “We may not like the government that came before us. But they did many things right. We have inherited an economy that is an asset.” All the governments since 1990 have maintained the more or less market-oriented economic and social models inherited from the military regime. Chile’s development raises many interesting questions about the relationship between development and democracy, political continuity and consensus building, etc. In relation to the former, Guyana and the other countries below have all suffered from years of autocratic rule and the condition in which Guyana has emerged is most telling.

GDP per capita (current US$)

Guyana      Chile       China       KoreaR     Singapore

1960              299            551            92                  156                   395

1965               331            700           97                 106                   516

1970              371            938           111                 279                   914

1975              674            694           175                608                 2506

1980              793          2468          193              1674                  4859

1985              602          1362           292              2368                 6485

1990              543          2395           314              6153               12091

1995              841          4957           604           11468                23916

2000            970          4880           949           10884                23019

2005          1073          7257        1715           16441                 28079

World Bank Indicators 2009
In Legislative Preferences, Political Parties, and Coalition Unity in Chile, Eduardo Aleman and Sebastian Saiegh, investigating an apparent bipolar alignment in the Chilean political party system, argued that the “stability and unity of Chilean multiparty coalitions have profound implications for the workings of Chilean democracy… Given the deep divisions that characterized the Chilean party system in the period before the military coup of 1973, a bipolar realignment would be an impressive break with the past. It would also be significant because in multiparty presidential systems stable legislative coalitions play a vital role in providing effective government.”  In 2006, Alejandro Foxley, then foreign minister, said that very early on, the first post-Pinochet democratic government recognised that “the constitutional rules left by Pinochet had ‘somewhat ironically fostered a more democratic system,’ for they forced major actors into compromise rather than confrontation and, by ‘avoiding populism,’ increased ‘economic governability.’”

In 1983, President Ronald Reagan’s State Department claimed that “Chile is a casebook study in sound economic management.” Now we have President Obama referring to it as “an example to us all.”  There may well be a lesson for us here!

Yours faithfully,
Henry B Jeffrey