Chile's neo-liberal revolution: Incremental decisions and structural transformation, 1973-89

Journal of Latin American Studies

Volumn 31, Issue 2, 1999, Pages 399-427

  Kurtz, Marcus J ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

DECISION MAKING; MILITARY GOVERNMENT; NEOLIBERALISM;

CHILE;

EID: 0032837533     PISSN: 0022216X     EISSN: None     Source Type: Journal    
DOI: 10.1017/S0022216X99005325     Document Type: Article

References (127)

1. See, for example, Eduardo Silva, 'Capitalist Coalitions, the State, and Neo-Liberal Economic Restructuring: Chile 1973-88', World Politics, vol. 45 (July 1993), and Ibid., 'The Political Economy of Chile's Regime Transition: From Radical to 'Pragmatic' Neo-Liberal Policies', in Paul Drake and Iván Jaksić (eds.), The Struggle for Democracy in Chile (Lincoln, 1992); J. Frieden, Debt, Development, and Democracy: Modern Political Economy and Latin America, 1965-1985 (Princeton, 1991); A. Foxley, Latin American Experiments in Neo-conservative Economics (Berkeley, 1983), p. 32; Rhoda Rabkin, 'How Ideas Become Influential: Ideological Foundations of Export-Led Growth in Chile (1973-90)', World Affairs, vol. 156, no. 1 (Summer 1993).
2. See, for example, Eduardo Silva, 'Capitalist Coalitions, the State, and Neo-Liberal Economic Restructuring: Chile 1973-88', World Politics, vol. 45 (July 1993), and Ibid., 'The Political Economy of Chile's Regime Transition: From Radical to 'Pragmatic' Neo-Liberal Policies', in Paul Drake and Iván Jaksić (eds.), The Struggle for Democracy in Chile (Lincoln, 1992); J. Frieden, Debt, Development, and Democracy: Modern Political Economy and Latin America, 1965-1985 (Princeton, 1991); A. Foxley, Latin American Experiments in Neo-conservative Economics (Berkeley, 1983), p. 32; Rhoda Rabkin, 'How Ideas Become Influential: Ideological Foundations of Export-Led Growth in Chile (1973-90)', World Affairs, vol. 156, no. 1 (Summer 1993).
3. See, for example, Eduardo Silva, 'Capitalist Coalitions, the State, and Neo-Liberal Economic Restructuring: Chile 1973-88', World Politics, vol. 45 (July 1993), and Ibid., 'The Political Economy of Chile's Regime Transition: From Radical to 'Pragmatic' Neo-Liberal Policies', in Paul Drake and Iván Jaksić (eds.), The Struggle for Democracy in Chile (Lincoln, 1992); J. Frieden, Debt, Development, and Democracy: Modern Political Economy and Latin America, 1965-1985 (Princeton, 1991); A. Foxley, Latin American Experiments in Neo-conservative Economics (Berkeley, 1983), p. 32; Rhoda Rabkin, 'How Ideas Become Influential: Ideological Foundations of Export-Led Growth in Chile (1973-90)', World Affairs, vol. 156, no. 1 (Summer 1993).
4. See, for example, Eduardo Silva, 'Capitalist Coalitions, the State, and Neo-Liberal Economic Restructuring: Chile 1973-88', World Politics, vol. 45 (July 1993), and Ibid., 'The Political Economy of Chile's Regime Transition: From Radical to 'Pragmatic' Neo-Liberal Policies', in Paul Drake and Iván Jaksić (eds.), The Struggle for Democracy in Chile (Lincoln, 1992); J. Frieden, Debt, Development, and Democracy: Modern Political Economy and Latin America, 1965-1985 (Princeton, 1991); A. Foxley, Latin American Experiments in Neo-conservative Economics (Berkeley, 1983), p. 32; Rhoda Rabkin, 'How Ideas Become Influential: Ideological Foundations of Export-Led Growth in Chile (1973-90)', World Affairs, vol. 156, no. 1 (Summer 1993).
5. See, for example, Eduardo Silva, 'Capitalist Coalitions, the State, and Neo-Liberal Economic Restructuring: Chile 1973-88', World Politics, vol. 45 (July 1993), and Ibid., 'The Political Economy of Chile's Regime Transition: From Radical to 'Pragmatic' Neo-Liberal Policies', in Paul Drake and Iván Jaksić (eds.), The Struggle for Democracy in Chile (Lincoln, 1992); J. Frieden, Debt, Development, and Democracy: Modern Political Economy and Latin America, 1965-1985 (Princeton, 1991); A. Foxley, Latin American Experiments in Neo-conservative Economics (Berkeley, 1983), p. 32; Rhoda Rabkin, 'How Ideas Become Influential: Ideological Foundations of Export-Led Growth in Chile (1973-90)', World Affairs, vol. 156, no. 1 (Summer 1993).
6. See, for example, Eduardo Silva, 'Capitalist Coalitions, the State, and Neo-Liberal Economic Restructuring: Chile 1973-88', World Politics, vol. 45 (July 1993), and Ibid., 'The Political Economy of Chile's Regime Transition: From Radical to 'Pragmatic' Neo-Liberal Policies', in Paul Drake and Iván Jaksić (eds.), The Struggle for Democracy in Chile (Lincoln, 1992); J. Frieden, Debt, Development, and Democracy: Modern Political Economy and Latin America, 1965-1985 (Princeton, 1991); A. Foxley, Latin American Experiments in Neo-conservative Economics (Berkeley, 1983), p. 32; Rhoda Rabkin, 'How Ideas Become Influential: Ideological Foundations of Export-Led Growth in Chile (1973-90)', World Affairs, vol. 156, no. 1 (Summer 1993).
7. D. Braybrooke, and C. E. Lindblom, A Strategy of Decision: Policy Evolution as a Social Process (London, 1963); and M. T. Hayes, Incrementalism and Public Policy (New York, 1992) are two classic exponents of the incrementalist approach to understanding decision-making.
8. D. Braybrooke, and C. E. Lindblom, A Strategy of Decision: Policy Evolution as a Social Process (London, 1963); and M. T. Hayes, Incrementalism and Public Policy (New York, 1992) are two classic exponents of the incrementalist approach to understanding decision-making.
9. H. Büchi, La Transformación Económica de Chile: Del Estatismo a la Libertad Económica (Barcelona, 1993), p. 25.
10. R. Kaufman, 'Industrial Change and Authoritarian Rule in Latin America: A Concrete Review of the Bureaucratic-Authoritarian Model', in David Collier (ed.), The New Authoritarianism in Latin America (Princeton, 1979), p. 180. David Hojman, 'The Political Economy of Recent Conversions to Market Economics in Latin America', Journal of Latin American Studies, vol. 26, no. 1 (February 1994), p. 195 is perhaps alone in asserting substantial continuity between pre- and post-coup economic policies.
11. R. Kaufman, 'Industrial Change and Authoritarian Rule in Latin America: A Concrete Review of the Bureaucratic-Authoritarian Model', in David Collier (ed.), The New Authoritarianism in Latin America (Princeton, 1979), p. 180. David Hojman, 'The Political Economy of Recent Conversions to Market Economics in Latin America', Journal of Latin American Studies, vol. 26, no. 1 (February 1994), p. 195 is perhaps alone in asserting substantial continuity between pre- and post-coup economic policies.
12. B. Stallings, 'Political Economy of Democratic Transition: Chile in the 1980s', in Barbara Stallings and Robert Kaufman (eds.), Debt and Democracy in Latin America (Boulder, 1989), pp. 183-4.
13. Pilar Vergara, 'Las Transformaciones de las Funciones Económicas del Estado en Chile Bajo el Régimen Militar', Colección Estudios CIEPLAN, vol. 53 (July 1981), p. 123 suggests that military leaders had such a programme in mind from an early date. Foxley, Latin American Experiments, Chs. 3-4 contends that the economic project was present within the military from an early date, while conceding that the broader political project was of substantially later vintage. Stallings, 'Political Economy', p. 183 suggests that at the time of the coup the military 'had a longer-term project in mind: to depoliticise the country, eliminate the power of labour and the left, and put a new economic mode in place'.
14. Pilar Vergara, 'Las Transformaciones de las Funciones Económicas del Estado en Chile Bajo el Régimen Militar', Colección Estudios CIEPLAN, vol. 53 (July 1981), p. 123 suggests that military leaders had such a programme in mind from an early date. Foxley, Latin American Experiments, Chs. 3-4 contends that the economic project was present within the military from an early date, while conceding that the broader political project was of substantially later vintage. Stallings, 'Political Economy', p. 183 suggests that at the time of the coup the military 'had a longer-term project in mind: to depoliticise the country, eliminate the power of labour and the left, and put a new economic mode in place'.
15. Pilar Vergara, 'Las Transformaciones de las Funciones Económicas del Estado en Chile Bajo el Régimen Militar', Colección Estudios CIEPLAN, vol. 53 (July 1981), p. 123 suggests that military leaders had such a programme in mind from an early date. Foxley, Latin American Experiments, Chs. 3-4 contends that the economic project was present within the military from an early date, while conceding that the broader political project was of substantially later vintage. Stallings, 'Political Economy', p. 183 suggests that at the time of the coup the military 'had a longer-term project in mind: to depoliticise the country, eliminate the power of labour and the left, and put a new economic mode in place'.
16. See, for example, M. S. Grindle and J. W. Thomas, Public Choices and Policy Change: The Political Economy of Reform in Developing Countries (Baltimore, 1991), pp. 78-9.
17. Even monetarist versus structuralist debates as to the causes of inflation were not yet resolved. See C. Kay, Latin American Theories of Development and Underdevelopment (London, 1989), pp. 47-57.
18. E. Silva, The State and Capital in Chile: Business Elites, Technocrats, and Market Economics (Boulder, 1996), especially Ch. 1, is an excellent (principally) social-coalitional analysis of the rise of Chilean neo-liberalism.
19. Foxley, Latin American Experiments, p. 32; Philip O'Brien, 'The New Leviathan: The Chicago School and the Chilean Regime, 1973-1980', Occasional Papers No. 38 (Glasgow, 1982), p. 5. For a more general argument about the effect of intra- governmental politics and the incentives created by political institutions see Barbara Geddes, 'The Politics of Economic Liberalisation', Latin American Research Review, vol. 30, no. 2 (1995).
20. Foxley, Latin American Experiments, p. 32; Philip O'Brien, 'The New Leviathan: The Chicago School and the Chilean Regime, 1973-1980', Occasional Papers No. 38 (Glasgow, 1982), p. 5. For a more general argument about the effect of intra- governmental politics and the incentives created by political institutions see Barbara Geddes, 'The Politics of Economic Liberalisation', Latin American Research Review, vol. 30, no. 2 (1995).
21. Foxley, Latin American Experiments, p. 32; Philip O'Brien, 'The New Leviathan: The Chicago School and the Chilean Regime, 1973-1980', Occasional Papers No. 38 (Glasgow, 1982), p. 5. For a more general argument about the effect of intra-governmental politics and the incentives created by political institutions see Barbara Geddes, 'The Politics of Economic Liberalisation', Latin American Research Review, vol. 30, no. 2 (1995).
22. Both P. O'Brien, 'Authoritarianism and the New Economic Orthodoxy: The Political Economy of the Chilean Regime, 1975-1983', in Philip O'Brien and Paul Cammack (eds.), Generals in Retreat: The Crisis of Military Rule in Latin America (Manchester, 1985), p. 148, and Foxley, Latin American Experiments, pp. 31-2, pursue this argument. It is not clear, however, why serious threats to property rights under the preceding Allende administration necessarily imply a shift to extreme liberalisation.
23. Both P. O'Brien, 'Authoritarianism and the New Economic Orthodoxy: The Political Economy of the Chilean Regime, 1975-1983', in Philip O'Brien and Paul Cammack (eds.), Generals in Retreat: The Crisis of Military Rule in Latin America (Manchester, 1985), p. 148, and Foxley, Latin American Experiments, pp. 31-2, pursue this argument. It is not clear, however, why serious threats to property rights under the preceding Allende administration necessarily imply a shift to extreme liberalisation.
24. A. Fontaine, Los Economistas y el Presidente Pinochet (Santiago, 1988), p. 46; see also P. Simund, The United States and Democracy in Chile (Baltimore, 1993), pp. 119-23; and J. Valdés, Pinochet's Economists (Cambridge, 1995), Ch. 1.
25. A. Fontaine, Los Economistas y el Presidente Pinochet (Santiago, 1988), p. 46; see also P. Simund, The United States and Democracy in Chile (Baltimore, 1993), pp. 119-23; and J. Valdés, Pinochet's Economists (Cambridge, 1995), Ch. 1.
26. A. Fontaine, Los Economistas y el Presidente Pinochet (Santiago, 1988), p. 46; see also P. Simund, The United States and Democracy in Chile (Baltimore, 1993), pp. 119-23; and J. Valdés, Pinochet's Economists (Cambridge, 1995), Ch. 1.
27. This is not to say that the economists who worked for the regime were unconvinced; they were. But the decisions were made by the generals, not the economists. And even into the 19805 the military - and General Pinochet - were willing to listen to non-liberal perspectives.
28. For a discussion of the differences between synoptic/rational and incremental decision-making see Braybrooke and Lindblom, Strategy of Decision, pp. 61-70.
29. By 1975 the Chilean state controlled the financial system as well as at least 444 of the largest industrial firms and virtually all large farms. See Daniel Wisevarver, 'Regulación y Deregulación en Chile: Septiembre 1973 a Septiembre 1983', Documento de Trabajo No. 59 (Santiago, 1986), p. 7; Cristobal Kay, 'Political Economy, Class Alliances and Agrarian Change in Chile', Journal of Peasant Studies, vol. 8, no. 4 (July 1981), p. 503; and Ian Roxborough, 'Agrarian Policy in the Popular Unity Government', Occasional Papers No. 14 (Liverpool, 1974), p. 27.
30. By 1975 the Chilean state controlled the financial system as well as at least 444 of the largest industrial firms and virtually all large farms. See Daniel Wisevarver, 'Regulación y Deregulación en Chile: Septiembre 1973 a Septiembre 1983', Documento de Trabajo No. 59 (Santiago, 1986), p. 7; Cristobal Kay, 'Political Economy, Class Alliances and Agrarian Change in Chile', Journal of Peasant Studies, vol. 8, no. 4 (July 1981), p. 503; and Ian Roxborough, 'Agrarian Policy in the Popular Unity Government', Occasional Papers No. 14 (Liverpool, 1974), p. 27.
31. By 1975 the Chilean state controlled the financial system as well as at least 444 of the largest industrial firms and virtually all large farms. See Daniel Wisevarver, 'Regulación y Deregulación en Chile: Septiembre 1973 a Septiembre 1983', Documento de Trabajo No. 59 (Santiago, 1986), p. 7; Cristobal Kay, 'Political Economy, Class Alliances and Agrarian Change in Chile', Journal of Peasant Studies, vol. 8, no. 4 (July 1981), p. 503; and Ian Roxborough, 'Agrarian Policy in the Popular Unity Government', Occasional Papers No. 14 (Liverpool, 1974), p. 27.
32. F. Larraín and P. Meller, 'The Socialist-Populist Chilean Experience, 1970-1973', in Rudiger Dornbusch and Sebastian Edwards (eds.), The Macroeconomics of Populism in Latin America (Chicago, 1991), pp. 206-11.
33. A. Valenzuela, The Breakdown of Democratic Regimes: Chile (Baltimore, 1978), pp. 77-80.
34. Junta Military de Gobierno, Bando No. 5, Reproduced in El Mercurio (Santiago, 26 September 1973), p. 22.
35. The best analysis of the ideological evolution of the Chilean military regime is Pilar Vergara, 'Auge y Caída del Neo-liberalismo en Chile: Un Estudio sobre la Evolución Ideológica del Régimen Militar', Documento de Trabajo No. 216 (Santiago, 1984).
36. This plan was rejected as impractical and unwise even by the conservative candidate Alessandri. See J. G. Valdés, La Escuela de Chicago: Operación Chile (Buenos Aires, 1989), p. 15 ; and Centro de Estudios Públicos (CEP), El Ladrillo: Bases de la Política Económica del Gobierno Militar Chileno (Santiago, 1992).
37. This plan was rejected as impractical and unwise even by the conservative candidate Alessandri. See J. G. Valdés, La Escuela de Chicago: Operación Chile (Buenos Aires, 1989), p. 15 ; and Centro de Estudios Públicos (CEP), El Ladrillo: Bases de la Política Económica del Gobierno Militar Chileno (Santiago, 1992).
38. Fontaine, Los Economistas, p. 45.
39. Larraín and Meller, 'The Socialist-Populist Chilean Experience', pp. 208-11.
40. R. Sáez, Programa de Desarrollo a Corto y Mediano Plazo (Santiago, 1974), pp. 3, 39-41.
41. Oficina de Planificación Nacional [ODEPLAN], El Sistema Socio-Económico Chileno (Santiago, 1978), p. 10; and S. de Castro, Exposición sobre el Estado de la Hacienda Pûblica (Santiago, 1981), pp. 9-10.
42. Oficina de Planificación Nacional [ODEPLAN], El Sistema Socio-Económico Chileno (Santiago, 1978), p. 10; and S. de Castro, Exposición sobre el Estado de la Hacienda Pûblica (Santiago, 1981), pp. 9-10.
43. See CEP, El Ladrillo.
44. Vergara, 'Auge y Caída, pp. 32-3.
45. ODEPLAN, Chile: El Desafío/The Challenge (Santiago, 1974 or 1975), p. 20.
46. A. Hirschman, Journeys Toward Progress: Studies of Economic Policy-Making in Latin America (New York, 1963), Ch. 4.
47. Ibid., p. 219.
48. 'II de Septiembre: El Informe de General Pinochet', Ercilla (Santiago, 18 September, 1974), p. 11.
49. L. Hastings, 'Regulatory Revenge: The Politics of Free-Market Financial Reforms in Chile', in Stephan Haggard et al. (eds.), The Politics of Finance in Developing Countries (Ithaca, 1993), p. 211.
50. As early as January, 1974 Finance Minister Gotuzzo made it clear that such potentially threatening trade liberalisation would be part of the moderate stabilisation package. Lorenzo Gotuzzo, 'Three Years to End Protection: New Tariff Schedule under Study', in Juan Méndez (ed.), Chilean Economic Policy (Santiago, 1979), pp. 77-81. In any event, S. De la Cuadra and D. Hachette, 'The Timing and Sequencing of a Trade Liberalization Policy: The Case of Chile', Documento de Trabajo No. 113, Instituto de Economía, Universidad Católica de Chile (Santiago, 1988), p. 76, argue that significant trade liberalisation was possible only because of the military's autonomy from such traditionally-powerful groups.
51. As early as January, 1974 Finance Minister Gotuzzo made it clear that such potentially threatening trade liberalisation would be part of the moderate stabilisation package. Lorenzo Gotuzzo, 'Three Years to End Protection: New Tariff Schedule under Study', in Juan Méndez (ed.), Chilean Economic Policy (Santiago, 1979), pp. 77-81. In any event, S. De la Cuadra and D. Hachette, 'The Timing and Sequencing of a Trade Liberalization Policy: The Case of Chile', Documento de Trabajo No. 113, Instituto de Economía, Universidad Católica de Chile (Santiago, 1988), p. 76, argue that significant trade liberalisation was possible only because of the military's autonomy from such traditionally-powerful groups.
52. The transfer of agrarian reform sector lands to private hands was not complete until 1979. Even the neo-liberal economists Sergio de la Cuadra and Salvador Valdés Prieto, 'Myths and Facts about Financial Liberalization in Chile: 1974-1982', Documento de Trabajo No. 128 (Santiago, 1990), p. 37 point out that the bank privatisation programme did not even solicit bids until July, 1975, and complete private control was not obtained until February, 1976.
53. Gobierno de Chile, Declaración de Principios del Gobierno de Chile (Santiago, 1974), p. 36. The junta declared itself opposed to Marxism as well as the materialism that in consumer societies 'spiritually enslaves' man (p. 10).
54. To cope with these tensions major initiatives were planned in the areas of labour law, worker participation in factory management, and the reform of the pensions system. See Air Force General Leigh in a speech to the USEC, 20 November 1974. Cited in Ercilla (Santiago, 27 November 1974). In agriculture, policy moved toward the creation a strong state-controlled co-operative system. See Instituto de Capacitación e Investigación en Reforma Agraria (ICIRA), Análisis de la Situación de los Asignatarios de Tierras a Junio de 1978 (Santiago, 1979).
55. To cope with these tensions major initiatives were planned in the areas of labour law, worker participation in factory management, and the reform of the pensions system. See Air Force General Leigh in a speech to the USEC, 20 November 1974. Cited in Ercilla (Santiago, 27 November 1974). In agriculture, policy moved toward the creation a strong state-controlled co-operative system. See Instituto de Capacitación e Investigación en Reforma Agraria (ICIRA), Análisis de la Situación de los Asignatarios de Tierras a Junio de 1978 (Santiago, 1979).
56. Quoted in F. Varas, Gustavo Leigh: El General Disidente (Santiago, 1980), p. 65.
57. On the repression, see Comisión Nacional de Verdad y Reconciliación (CNVR), Informe de la Comisión Nacional de Verdad y Reconciliación (Santiago, 1990).
58. Inflation persisted at levels in excess of 500 per cent. At the same time Chile was buffeted by an external shock. Between 1975 and 1975 there was a six-fold increase in the price of imported oil, while copper, Chile's principal export, suffered a real price decline of 46.7 per cent; Banco Central de Chile, Economic Report of Chile 1982 (Santiago, 1982), p. 58.
59. See Vergara, 'Auge y Caída', p. 95; and CEP, El Ladrillo, p. 19.
60. See Vergara, 'Auge y Caída', p. 95; and CEP, El Ladrillo, p. 19.
61. J. Cauas, 'The Government Economic Recovery Program', Text of an address to the nation, April 24, 1975. Transcribed in J. C. Méndez (ed.), Chilean Economic Policy (Santiago, 1979), p. 161.
62. J. Cauas, 'The Government Economic Recovery Program', Text of an address to the nation, April 24, 1975. Transcribed in J. C. Méndez (ed.), Chilean Economic Policy (Santiago, 1979), p. 161.
63. Tomás Moulian and Pilar Vergara, 'Estado, ideología, y políticas económicas en Chile, 1973-1978', Colección Estudios CIEPLAN, vol. 3 (1978), p. 79.
64. See ODEPLAN, El Sistema, pp. 21-2; ODEPLAN, Plan Nacional Indicativo de Desarrollo 1978-1983 (Santiago, 1978), p. 37.
65. See ODEPLAN, El Sistema, pp. 21-2; ODEPLAN, Plan Nacional Indicativo de Desarrollo 1978-1983 (Santiago, 1978), p. 37.
66. Silva, State and Capital, pp. 108-9.
67. Fontaine, Los Economistas, pp. 70-87.
68. The orthodox measures introduced in 1975 were consistently deepened until by 1979 tariffs on virtually all imports were reduced to ten per cent, and the peso was officially pegged to the dollar at a rate of 39 to one. R. Ffrench-Davis, 'Import Liberalization: The Chilean Experience, 1973-1982', in J. Samuel Valenzuela and Arturo Valenzuela (eds.), Military Rule in Chile: Dictatorship and Oppositions (Baltimore, 1985), pp. 56-7. While tariff reduction was gradual, it eventually went far beyond the 60 per cent level declared by the neo-liberals at the beginning of the phase as the final goal.
69. G. Arriagada, Pinochet: The Politics of Power (Boulder, 1991), p. 28.
70. Instituto Nacional de Estadística [INE], 'Sistema para Calcular Variaciones del Indice de Precios al Consumidor (IPC) y su Aplicación en la Reajustabilidad de Cantidades', unpubl. ms. (Santiago, 1992), p. 3.
71. Banco Central de Chile, Economic Report of Chile, p. 38.
72. Política: El Tiempo Social', Ercilla (Santiago, 26 April 1978), pp. 12-13.
73. Augusto Pinochet, 'Address by H. E. the President of the Republic of Chile, General of the Army Augusto Pinochet Ugarte on the Third Anniversary of the Military Coup' (Santiago, 1976), pp. 26-52.
74. Moulian and Vergara, 'Estado, Ideología', p. 85.
75. Speech given at Chacarillas to the Juventud de Unidad Nacional. Transcribed in 'Anoche en Chacarillas: S. E. Indicó Grandes Líneas Institucionales', El Mercurio (Santiago, 10 July 1977), pp. 37, 39.
76. A clear example of this was the attempt in agriculture to create a state-run co-operative system to replace existing peasant unions and independent co-ops.
77. See T. Banuri, Economic Liberalization: No Panacea (Oxford, 1991), pp. 6-8.
78. This is success only in terms of the goals of military rulers. Throughout this period unemployment remained high, wages remained depressed, and distributional inequality worsened. See Patricio Meller, et al. 'Growth, Equity, and the Environment in Chile: Issues and Evidence', World Development, vol. 24, no. 2 (1996), p. 262.
79. De Castro, Exposición, p. 23.
80. P. Meller and P. Romaguera, 'Evolución Macroeconómica', in Patricio Meller, et al. (eds.), Chile: Evolución Macroeconómica, Financiación Externa y Cambio Político ed la Década de los 80 (Madrid, 1992).
81. Quoted in ¿Qué Pasa? (Santiago, 27 December 1980), translation by the author.
82. See Arriagada, Pinochet, pp. 29, 47-8.
83. Over the period 1977-81, GDP recorded average annual real growth rates of 7.9 per cent. Inflation declined from 63.5 per cent in 1977 to 9.5 per cent in 1981, and foreign indebtedness rose from 5.2 billion USD to 15.5 billion. Data for growth calculated from S. Edwards and A. Cox Edwards, Monetarism and Liberalization: The Chilean Experience (Cambridge, 1987), p. 12. Inflation figures from INE, Sistema, p. 3. Debt figures from Banco Central de Chile, Indicadores Económicos y Sociales 1960-1988 (Santiago, 1989), p. 343.
84. Over the period 1977-81, GDP recorded average annual real growth rates of 7.9 per cent. Inflation declined from 63.5 per cent in 1977 to 9.5 per cent in 1981, and foreign indebtedness rose from 5.2 billion USD to 15.5 billion. Data for growth calculated from S. Edwards and A. Cox Edwards, Monetarism and Liberalization: The Chilean Experience (Cambridge, 1987), p. 12. Inflation figures from INE, Sistema, p. 3. Debt figures from Banco Central de Chile, Indicadores Económicos y Sociales 1960-1988 (Santiago, 1989), p. 343.
85. Over the period 1977-81, GDP recorded average annual real growth rates of 7.9 per cent. Inflation declined from 63.5 per cent in 1977 to 9.5 per cent in 1981, and foreign indebtedness rose from 5.2 billion USD to 15.5 billion. Data for growth calculated from S. Edwards and A. Cox Edwards, Monetarism and Liberalization: The Chilean Experience (Cambridge, 1987), p. 12. Inflation figures from INE, Sistema, p. 3. Debt figures from Banco Central de Chile, Indicadores Económicos y Sociales 1960-1988 (Santiago, 1989), p. 343.
86. It also helped that exclusive control over the labour issues had been removed from Air Force purview by the mid 19705. And in July of 1978 General Leigh was expelled from the junta, removing from the decision-making circle the most prominent supporter of corporatist policies and critics of neo-liberalism. See Varas, Gustavo Leigh, pp. 24, 65.
87. José Piñera, the architect of the reforms, justified them on exactly these grounds. Interest group pressure on the state was exactly what the new system was designed to avoid. J. Piñera, El Cascabel al Gato: La Batalla por la Reforma Previsional (Santiago, 1991), pp. 157-8.
88. See M. Garretón, 'Political Processes in an Authoritarian Regime: The Dynamics of Institutionalisation and Opposition in Chile, 1975-1980', in J. Samuel Valenzuela and Arturo Valenzuela (eds.), Military Rule in Chile: Dictatorship and Oppositions (Baltimore, 1985), p. 150; and P. Vergara, 'Market Economy, Social Welfare, and Democratic Consolidation in Chile', in William Smith, et al. (eds.), Democracy, Markets, and Structural Reform in Latin America (New Brunswick, 1994), pp. 238-9.
89. See M. Garretón, 'Political Processes in an Authoritarian Regime: The Dynamics of Institutionalisation and Opposition in Chile, 1975-1980', in J. Samuel Valenzuela and Arturo Valenzuela (eds.), Military Rule in Chile: Dictatorship and Oppositions (Baltimore, 1985), p. 150; and P. Vergara, 'Market Economy, Social Welfare, and Democratic Consolidation in Chile', in William Smith, et al. (eds.), Democracy, Markets, and Structural Reform in Latin America (New Brunswick, 1994), pp. 238-9.
90. See CEP, El Ladrillo, p. 41; and J. Petras and F. I. Leiva, Democracy and Poverty in Chile: The Limits of Electoral Politics (Boulder, 1994), p. 22.
91. See CEP, El Ladrillo, p. 41; and J. Petras and F. I. Leiva, Democracy and Poverty in Chile: The Limits of Electoral Politics (Boulder, 1994), p. 22.
92. José Piñera, quoted in Dagmar Raczynski, 'Social Policies in Chile: Origin, Transformations and Perspectives ', Democracy and Social Policy Series Working Paper No. 4 (Notre Dame, 1993), p. 54.
93. Official statistics report a collapse in GDP of 14.1 per cent in 1982. Real wages tumbled some 11 per cent between 1982 and 1985, and open unemployment surged from 8.1 per cent in July-September of 1981 to 23.9 per cent in 1982. (Data calculated from Banco Central de Chile, Indicadores, pp. 26, 277, 303.)
94. Vergara, 'Market Economy'; an 'Auge y Caída'; E. Silva, 'Capitalist Coalitions'; and Foxley, Latin American Experiments.
95. Vergara, 'Market Economy'; an 'Auge y Caída'; E. Silva, 'Capitalist Coalitions'; and Foxley, Latin American Experiments.
96. Vergara, 'Market Economy'; an 'Auge y Caída'; E. Silva, 'Capitalist Coalitions'; and Foxley, Latin American Experiments.
97. Vergara, 'Market Economy'; an 'Auge y Caída'; E. Silva, 'Capitalist Coalitions'; and Foxley, Latin American Experiments.
98. Silva, State and Capital, Ch. 7.
99. Ibid., pp. 175-92.
100. De la Cuadra and Valdés Prieto, 'Myths and Facts', p. 16.
101. M. Barrera and J. S. Valenzuela, 'The Development of Labour Movement Opposition to the Military Regime', in J. Samuel Valenzuela and Arturo Valenzuela (eds.), Military Rule in Chile: Dictatorship and Oppositions (Baltimore, 1986), pp. 260-1; Silva, State and Capital, p. 174.
102. M. Barrera and J. S. Valenzuela, 'The Development of Labour Movement Opposition to the Military Regime', in J. Samuel Valenzuela and Arturo Valenzuela (eds.), Military Rule in Chile: Dictatorship and Oppositions (Baltimore, 1986), pp. 260-1; Silva, State and Capital, p. 174.
103. Silva, State and Capital, p. 179.
104. For a brief period of adjustment, tariff levels were raised to 35 per cent, some debt relief was granted to the private sector, and continuing protection was reintroduced for those traditional (non-exportable) crops typically grown on large farms. See Frieden, Debt, Development, and Democracy, p. 174. Silva, State and Capital, p. 179 reports that in 1984 massive loan renegotiations were extended reducing interest rates to the comparatively minimal 5-6 per cent level, and in addition two year grace periods were granted.
105. For a brief period of adjustment, tariff levels were raised to 35 per cent, some debt relief was granted to the private sector, and continuing protection was reintroduced for those traditional (non-exportable) crops typically grown on large farms. See Frieden, Debt, Development, and Democracy, p. 174. Silva, State and Capital, p. 179 reports that in 1984 massive loan renegotiations were extended reducing interest rates to the comparatively minimal 5-6 per cent level, and in addition two year grace periods were granted.
106. D. Hojman, Chile: The Political Economy of Development and Democracy in the 1990s (Pittsburgh, 1992), p. 134.
107. The peso was devalued by almost 88 per cent between 1982 and 1988, according to C. Budnevich, 'Implicaciones Financieras de las Privatizaciones en Chile: Lecciones del Período 1985-1990', in Las Privatizaciones en Chile (Santiago, 1993), pp. 115-17. In addition, business costs were reduced first by the abolition of wage-indexation in 1981 and later through tax reduction in 1984.
108. G. Campero, 'Entrepreneurs and the Military Regime', in Drake and Jaksić (eds.), The Struggle for Democracy in Chile (Lincoln, 1992), pp. 135-6.
109. E. Silva, 'Capitalist Coalitions', p. 117.
110. Ibid., p. 116.
111. A. Butleman, 'Financiación Externa', in Meller, et al. (eds.), Chile: Evolución Macroeconómica (Madrid, 1992), p. 86; Budnevich, 'Implicaciones Financieras', p. 122.
112. A. Butleman, 'Financiación Externa', in Meller, et al. (eds.), Chile: Evolución Macroeconómica (Madrid, 1992), p. 86; Budnevich, 'Implicaciones Financieras', p. 122.
113. P. Silva, 'The State, Politics, and Peasant Unions', in Cristóbal Kay and Patricio Silva (eds.), Social Change in the Chilean Countryside: From the Pre-Land Reform Period to the Democratic Transition (Amsterdam, 1992), pp. 225-7.
114. See P. Silva, 'Landowners and the State: From Confrontation to Co-operation?', in Kay and Silva (eds.), Social Change, p. 282.
115. Thus we see that while the average international price for wheat declined 22.1 per cent between 1980-4 and 1985-8, the average real wholesale price in Chile, however, increased by 8.2 per cent over the same period (calculated from D. Carreño, 'La década Agraria en Cifras', unpubl. ms. (Santiago, 1992), no pagination). Between 1983 and 1987, however, the land area planted in wheat increased 88.4 per cent.
116. P. Silva, 'Landowners and the State', p. 284.
117. Rabkin, 'How Ideas Become Influential'.
118. Valdés, Pinochet's Economists, Ch. 7.
119. For example, throughout the third phase (1979-82) the exchange rate was fixed, but not before or after. In 1983-4 virtually the entire banking system was taken over by the government, and after 1984-5, substantial moves in the direction of import substitution were instituted for key crops.
120. See Hojman, 'The Political Economy', p. 211.
121. Kenneth Roberts, 'From the Barricades to the Ballot Box: Redemocratization and Political Realignment in the Chilean Left', Politics and Society, vol. 23, no. 4 (December 1995), p. 513.
122. Foxley, Latin American Experiments, pp. 29-32.
123. O'Brien, 'The New Leviathan', p. 5.
124. Fontaine, Los economistas, p. 73.
125. Silva, State and Capital, especially Chs. 5-7.
126. E. Silva, 'Capitalist Coalitions', pp. 544-5.
127. Banco Central de Chile, Indicadores, p. 337.