TODAY CHILE IS careening, quietly and in a carefully planned way, toward the greatest political catastrophe of its history. Within the next year or so, its people will be permitted to decide by plebiscite whether or not to accept a president proposed to them by their ruling military junta. If the vote is “yes,” the country will enter Into an eight-year term under a radically undemocratic constitution, to be enforced by a military-dominated “national security council,” If the vote is “no,” a competitive election will be held a year later, and the winner, who is bound to be a member of the present opposition, will have to uphold the rules of a political system in which, presumably, he will not believe.
But Chile's political dilemma is even simpler, and more dangerous. In the coming plebiscite, the candidate of the junta will inevitably be the present chief of state. Gen. Augusto Pinochet Ugarte, The vote, then, must be “yes,” because the junta cannot afford to have it any other way. For at this moment in Chile's history the stakes are too high to risk an uncertain outcome. Much blood has been shed. Thirteen years into one of the cruelest military dictatorships in the history of Latin America, the victors are perhaps even more frightened of the future than are the vanquished. In spite of the serious doubts that many Chilean generals and admirals are known to harbor about the personality of General Pinochet, about his capacity to withstand honest electoral scrutiny {opinion polls give him between 15 percent and 20 percent of the vote), and in spite, too, of their reluctance to participate in an electoral fraud, the armed forces of Chile will go along with Pinochet's designs.
Never mind that a fraud at the polls will further polarize their society, render it ungovernable, and gradually discredit the forces of the center. Never mind that the real beneficiaries of the exercise will only be those from whom Pinochet and his generals have always claimed to rescue their country: the Communists and their allies on the violent left. Of course there is always the possibility that the Chilean army will come alive to its own narrow institutional self-interest and take action against Pinochet, thus sparing itself the fate of the officer classes of Cuba and Nicaragua. But the chance is remote. This is a Prussianized, professional, vertically organized military, which will march blindly off the precipice of history and take an entire country with it.
I.
THE CHILEAN CRISIS has been long in coming. Fixing its origin depends wholly upon one's ideological or historiographic preferences. Still, some generalizations can be made. Between 1938 and 1973 the Chilean economy performed at best indifferently, often much worse. Inflation, unemployment, distortions of the market, vast asymmetries of wealth and poverty all fought at cross-purposes with a political culture that was distinguished by civility, order, and tolerance, and marked, too, by widening participation, particularly after 1958, when the rural electorate was finally guaranteed the secret ballot, (In 1964 women could vote for the first time.) However, populism in Chile never fully succeeded—as it did in neighboring Argentina—in creating political bridges between the rich, the middle class, and the poor; between the city and the countryside; between the Catholics and the non-believers.
This was reflected in the fact that only one president elected since 1952—the Christian Democrat Eduardo Frei (1964- 70)—received an absolute majority. Even his 56 percent was possible only because the right, terrified of Socialist Salvador Allende, channeled its votes to the lesser of two evils, Allende himself finally won on his fourth try in 1970, He was the first Marxist chief of state freely elected anywhere in the world—but only because of a three-way contest in which his own Popular Unity coalition (Socialist, Communist, and other, smaller parties) edged out the candidate of the right, Jorge Alessandri, by less than two percentage points.
The causes of Allende's failure to complete his term—a collapse that brought the entire democratic system down with him—is the subject of one of the longest-running controversies of recent history. Because of the evident involvement of the United States, the fall of Allende has become central to the “revisionist” indictment of postwar American foreign policy. It is certainly true that Richard Nixon and Henry Kissinger made a serious attempt to prevent Allende from taking power in 1970, and also that the CIA covertly funded opposition newspapers, radio stations, and electoral activities in 1971, '72, and '73, Evidently there would have been no coup from the right without American assistance, (Though Chile's pluralist democracy might just as easily have fallen prey to the machinations of the Leninist left; the survival of a free press in Chile in 1973 was due not to the good intentions of the Allende government, which was busily expropriating independent sources of advertising and distribution, but to the generosity of foreign funders.) But even the Church committee, which investigated these matters in 1973, '74, an '75, was forced to conclude that there was no American involvement in the coup itself.
In Chile—as opposed to the circles of Chilean exiles and their political allies abroad—the American role has never been regarded as central to the failure of the Popular Unity experiment. Most Chileans prefer to place Allende within the more parochial but more pertinent context of their own national politics. They see him not as a martyred, world-historical revolutionary, but as an ordinary politician who pushed (or allowed himself to be pulled) further and faster to the left than public opinion, the economic system, and the international context would permit. In the process he shattered what appears to have been a remarkably fragile political consensus.
THE PRICE of this lesson has been high, Chile was once a nation known for its poets, painters, scholars, and parliamentarians; its public life is now afflicted by an obscurantism reminiscent of Franco's Spain, a country it resembles in a number of respects. In one way, though, Chile is not like Franco's Spain at all; it has an opposition press, including two new daily newspapers. La Epoca and Fortin Mapocho; its book publishing industry is relatively uncensored; Chilean scholars, social scientists, and politicians travel abroad constantly and (to the chagrin of their government) receive subsidies, grants, and fellowships —from European political parties, the United Nations, and now, also, from our own National Endowment for Democracy— with which they have founded their own research institutes to carry on serious work free of supervision by the militaryappointed rectors and intervenors that dominate the national university. The result is that whereas most of the serious academic work by Spaniards on their country in the 1950s and '60s had to be published in France, democratic Chile has been able to reconstitute its intellectual life at home. This is one of the few really promising signs on the political horizon.
This crucial distinction will be missed by those who rely on Gabriel Garcia Marquez's little pamphlet Clandestine in Chile. It describes the adventures of agitprop filmmaker Miguel Littin, an exile since 1973, who slipped into the country unnoticed for a few weeks in 1985, made a film, and then returned to Spain. The publisher boasts on the dust jacket that 15,000 copies of Garcia Marquez's book, published in Colombia, were confiscated and burned in Chile by Pinochet's Interior Ministry. Perhaps, but one cannot help wondering why. Far more potentially subversive books have been published in Chile and sold there. Nor is Littin's militant filmmaking unique in Chile: John Dinges's By Reason or Force, shown on public television in the United States, was made there in 1983, and another such effort, made under circumstances similar to Dinges's, Chile: Hasta Cuando?, was recently exhibited in New York. The number of Chileans who cannot return to their country—5,000 at the time of Littin's visit—has dropped below 1,000, although Pinochet's indulgences are often more readily available these days to communists than to democratic socialists. This point illustrates the complexities of the Chilean political and cultural scene: repression is selective and often irregular; and Communists are both feared and needed.
A SAMPLE OF the best kind of work being done within the country by independent, democratic scholars appears in Military Rule in Chile: Dictatorship and Oppositions, edited by two Chilean- American academics, J. Samuel Valenzuela of Harvard University and Arturo Valenzuela of Georgetown University, The essays illuminate the sui generis nature of the Chilean dictatorship, an ugly hybrid that combines Hispanic military personalism with a Chilean penchant for legalism. Almost alone among military dictators in the history of Latin America, Pinochet has been driven by a desire to build enduring authoritarian institutions. This explains his constant resort to plebiscites (there have been two since 1973), and the proliferation of councils and official study groups of fascist lawyers, busily plotting Chile's political future down to the last detail. Nothing could be further from the drunken improvisations of Gen. Leopoldo Galtieri in Argentina than the clever, casuistic logic of the Chilean Constitution of 1980.
Like most authoritarian regimes of the right, the Chilean government is anti-political, rather than just anti-Communist. Pinochet himself has argued in his autobiography. The Decisive Day, which appeared in 1980, that democracy almost inevitably leads to communism, since moderate and even conservative politicians are so hungry for power that they will strike bargains with anyone who seems to promise a few more votes. Thus “politics” of any kind is something from which the Chilean people have to be protected. Left to their own devices, the Chileans are bound to stumble into some form of Marxism-Leninism.
The Valenzuelas refute such views. With a wealth of data going back to the 1930s, they destroy once and for all the lingering notions that (1) the rise of the left is closely associated with widening political participation; (2) the fortunes of the left are closely tied to its appeal to the impoverished sectors of society; (3) government economic policies, by dramatically changing the economy, will erode the bases of support for political parties; (4) the Chilean party system consists of cadres and militants who have few roots in society. In fact, they maintain, if the Chilean people are preternaturally drawn toward any political system at all, it would seem to be bourgeois democracy, or rather bourgeois social democracy.
A recent poll (May 1986) conducted by FLACSO, a Santiago think tank associated with the socialist party, corroborates and enriches the Valenzuelas' argument. It shows that the largest single segment of Chilean opinion, 33 percent, defines itself as “center”; an additional 23 percent as “center-right” or “right”; 21 percent as “center-left”; and a mere 13 percent as “left.” One way of interpreting these figures is to compare them with actual election results in the past. Combine center, center-right, and right, and you have 56 percent, which is precisely the percentage Eduardo Frei received in 1964. Similarly, combine left and center-left, and you have 34 percent, which is less than three percentage points short of the plurality Allende received in 1970. Moreover, in the parliamentary elections in 1973, which were the last elections held in Chile, the Popular Unity list received 44 percent, and its combined conservative-Christian Democratic opponent 56 percent.
In sum, despite the presumptive radicalization of a new generation by widespread unemployment, state terror, and the periodic paroxysms of repression, the center of ideological gravity in Chile remains what it was 25 years ago: overwhelmingly at, well, the center. The problem for Chile, then, has been its inability to translate its broader trends into effective political expressions. Too many individual parties have been trying to occupy the same political space. But as the Valenzuelas point out, prior to 1973, and over many years, “All Chilean parties had heterogeneous bases of support and drew the bulk of their voters from the poorer sections of society.” This Chilean center is somewhat to the left of its equivalent in the United States. But it is not Marxist-Leninist by a long shot. In 1972-73, when genuine Marxism made its first and only emergence in Chile, the vast majority of Chileans stoutly opposed it, including many who considered themselves “progressive.” Some even found themselves dreaming of, or begging for, a military coup.
II.
A COUP SEEMED an unlikely prospect in the early 1970s. Almost alone among Latin American nations, Chile possessed genuinely resilient political institutions and a tradition of civilian control of the military. Between the 1820s and 1973, there were only three episodes of serious military involvement in politics: the civil war of 1891 (in which the army and navy divided), a brief episode in 1924-25, and the dictatorship of Col. (later General) Carlos Ibafiez del Campo in 1931-32. The first two were the consequence of divisions within the civilian political community; the last was an outgrowth of the depression, which hit Chile with a force unequaled almost anywhere in the world. When Ibafiez stepped down in 1931, fleeing the country and leaving it much the worse for his efforts, an entire generation of cadets and young officers resolved never again to surrender the prestige of their institutions to the intrigues of civilian politicians.
Certain long-term trends reinforced the army's withdrawal from politics. Between the 1880s and the First World War, the Chilean army was trained by German officers, from whom it absorbed the tradition of obedience to superiors. More to the point, political leadership in Chile proved capable of resolving most of the problems that invited (or facilitated) military intervention in other Latin American countries. In addition, after 1932 it was the militarized national police—the Carabineros, modeled on Spain's Civil Guard—that took over the unlovely task of putting down strikes, riots, and other disorders. Finally, in the nearly 40 years prior to Allende's inauguration, most administrations dealt severely with military intrigue and insubordination. Thus civilian supremacy was a working Chilean tradition as late as 1970. The Church committee discovered that the CIA found it almost impossible to recruit officers for a “constitutional coup” against Allende.
Yet only three years later civilian-military relations in Chile had altered beyond all recognition. Part of that story is told in the remarkable memoirs of Gen. Carlos Prats Gonzalez, who served as Allende's army chief, minister of interior, and minister of defense from 1971 to 1973. Slightly more than two weeks before the coup on September 11, 1973, Prats was forced into retirement by his colleagues. After the fall of Allende, he was permitted by Pinochet to go into exile in Buenos Aires, where, a little more than a year after the coup, he and his wife were killed by a bomb. The case has never been solved.
AT THE TIME of his death, General Prats was known to be writing his memoirs. Finally published in Chile in 1985, they recapture the way the world looked to Chileans during the Allende years. Much of the book appears to be based on diaries, and near the end we are given the raw materials that Prats did not live to rewrite. (A final chapter of reflections is written in such a different style, and from so different a political point of view, that it raises serious questions as to whether it might not be the work of others; Prats's ghost, after all, is something of a political weapon.) General Prats became the chief of the army late in 1970, as the result of the murder of Gen. Rene Schneider, who died resisting a kidnap attempt shortly before the Chilean Congress was scheduled to confirm Allende's electoral victory. (This episode was the result of covert efforts by the CIA, but it was so badly bungled that it strengthened the “constitutionalist” line in the army and assured rather than prevented Allende’s inauguration.) Prats succeeded Schneider through seniority, not because of any particular confidence on the part of the president-elect, whom he had never met. But in the coming years he was to forge an extraordinarily close relationship with Allende, even acting as his vice-president when Allende went on a foreign tour in late 1972. What began as mere military professionalism and respect for the constitutional supremacy of civilian authority became something else over time.
In 1970, during the period between Allende's election in September and his inauguration in November, Schneider and Prats were suddenly invited to the homes of conservative politicians and retired military officers. The purpose, quite obviously, was to sound out the armed forces for some sort of action that would prevent the new president from taking office. Even after Schneider's death, which was traced to several retired officers and cast suspicion upon one or two high-ranking army commanders still on active duty, Prats thought that the number of “deliberative (politicized)” officers was small. The army's loyalty to the government continued in 1971 and most of 1972, but tensions were increasing. More officers began to speak out, though Prats was still able to keep his colleagues under control, disciplining those who violated the rule of non-partisanship. By late 1972, however, the Chilean political community had become so polarized by a national strike of the opposition that Allende was compelled to ask Prats and two other flag officers to enter his Cabinet to negotiate an understanding with the opposition.
AS INTERIOR MINISTER, Prats operated in a highly sensitive environment. Since the line between subversion and legitimate dissent kept shifting, there was resentment and confusion on both sides. The interior minister began to be attacked by adversaries of the government for taking advantage of his military position. Moreover, because much of what Allende or his followers did was of questionable legality at best, supporting the government came to signify a partisan political commitment with broad, even revolutionary, consequences.
There began a series of attacks on Prats by the opposition press—by all accounts a scurrilous affair, which seems to have pushed the general closer to the left, personally if not-politically. More to the point, the unpopularity of the Allende regime, particularly with the middle class (from which most officers and their families came), eventually broke down the wall between the civilian and the military communities. Both Prats and his conservative colleagues became uniformed symbols of the conflict that was raging in the streets between different sectors of civil society.
Today it is easy to see how recklessly the opposition proceeded, particularly the Christian Democrats. Prats warned presciently that a military coup would solve nothing, that it would visit upon the country all of the evils that have, in fact, since descended upon it. Still, these memoirs remind us that at the time a military dictatorship of the right was only one—-and not necessarily the most likely—of the possible outcomes. Across the Andes, Argentina was about to embark upon its third essay in messianic populism under Gen. Juan Peron; in Peru, to Chile's north, the armed forces had themselves seized control of the government in 1968 and were in the process of implementing a program remarkably similar to Allende's—right down to his land, tax, and industrial reforms (and with much the same results). Allende himself was not above courting the armed forces with a healthy increase in pay and allowances, which had fallen in serious arrears during the Christian Democratic period.
There was, in short, a genuine fear in the ranks of the opposition that Allende would achieve his objectives through an informal military putsch. Meanwhile, people like Senator Carlos Altamirano, Allende's rival for ideological hegemony in the Socialist Party, openly boasted of support in the army, particularly in the enlisted ranks. And in the last, overheated days of the regime, the pro-government daily Puro Chile even published an interview with a sergeant explaining how the NCOs could take over their units and run them without officers.
IN THE WEEKS before the coup itself, Santiago was rife with rumors that the armed forces were going to seize power and force Allende and the Christian Democrats to settle their differences, that the army would create a kind of Cabinet of national conciliation in which the service chiefs would participate. It now appears that the political gossips were not far off the mark: Prats explains that in August 1973 his colleagues in the navy and air force were suggesting a Cabinet of generals and “apolitical personalities”—a golpe seco, or dry coup. Prats believed, quite rightly, that Allende would never accept such an outcome. But by asking the military to provide him with ministers to close a gap with the opposition that he would not (or rather, could not) bridge by normal political means, was not Allende, too, suggesting a Socialist variation of the same?
Prats himself feared fratricidal bloodshed and the unraveling of civic life. He did not anticipate a full-dress neofascist state. He thought of Pinochet, who succeeded him as head of the army in late August 1973, as his closest professional friend; Pinochet appears in these pages as a loyal collaborator of the pro-government line until the very last moment. Indeed, as difficult as it is to believe now, few people at the time expected what finally happened. The army's place in politics had not yet been chillingly fixed.
III.
THE ALLENDE experience—or rather the memory of it—remains central to the politics of Chile, because upon it hinges the question of what democracy might mean in the future. Of course the self-serving Pinochet and his dwindling band of supporters insist that the events of the early 1970s prove that a politically unrestrained Chile will lurch into some sort of Marxism. The notion that the army is all that stands between Chile and communism is Pinochet's last, most desperate card, and perhaps his only one. But the same contemptible notion is peddled by the far left too—by the revolutionary wing of the Socialist Party under Clodomiro Almeyda, the Movement of the Revolutionary Left (MIR), and the Manuel Rodriguez Patriotic Front. In its left-wing form, it has even more pernicious implications. For, to the extent that the far left's version of recent Chilean history is believed, it will push many moderate Chileans back in the direction of the dictatorship. And too many foreigners, safely tucked away in the democratic West, have joined this apocalyptic chorus.
They will get plenty of new material from Peter Winn's Weavers of Revolution. A case study of a textile mill before, during, and after Allende, it is also an attempt to write an entire history of the regime in miniature. The book starts out well enough; indeed, it makes a very valuable contribution to Chilean social history. Winn's account of labor relations under the old regime is based, like much else in his book, on extensive interviews. That his book is like an oral history gives it an immediacy and vividness of detail. Winn fleshes out what the workers (or their children) told him by consulting Chilean government documents, newspapers, and other printed sources, so that his picture seems convincing and complete.
The factory Winn studied was part of a textile empire founded by a Palestinian who immigrated to Chile via Bolivia in the 1930s. Juan Yarur was no philanthropist, but he was a man of vision, with a great practical gift. He treated his workers, most of whom were women who had recently come from the countryside, with a strong hand, combining draconian, Victorian-style labor discipline with a paternalistic interest in their welfare. Right to the day of Allende's election, the Yarur mills had only a company union (which was a fairly unusual situation in Chile for an enterprise of this scale, a point Winn does not mention).
The real change in the Yarur enterprise came with Juan's death in 1954 and the succession of Amador, one of his two sons. Like many a child of a great man, Amador never measured up; his management of the factory combined all of the exaggerated evils of Chilean capitalism with none of the ameliorating paternalistic tendencies of his father. Moreover, events outside the factory walls were slowly dooming the kind of economic entity Yarur represented. The Christian Democrats, elected in 1964, began to impose new or stricter regulations on health, safety, and maternity leave (causing the factory to hire more men and fewer women). And when Allende himself visited Yarur during the 1970 presidential campaign, he told Don Amador to his face, before a packed gathering of workers, that he intended to expropriate his property.
AFTER Allende's election, the Communist. Socialist, and other parties of the left began to feel more secure about attempting to organize an independent union. By 1971 they had accomplished this, as well as many improvements in pay, fringe benefits, and working conditions. Then, in late 1971, the more “advanced” workers in the independent union voted for a lengthy strike. Some of their leaders had made calculations: under existing Chilean labor law, the government was empowered to “requisition” a factory producing articles of prime necessity under certain circumstances, such as lockouts or strikes that could not be resolved by ordinary arbitration. And with a friendly government in power, a strike was the simplest, most expeditious way to “liberate” their factory. And so it was. Allende himself was far from pleased by this development, but eventually he bowed, under pressure from two of his ministers, to the workers' decision.
Why would Allende, who had already put the Yarurs on notice that they were due for expropriation, oppose ratifying such a fait accompli? The answer is that the president saw this sort of toma, or seizure, as a threat to his grand political strategy, which was to separate politically a handful of wealthy economic clans from the vast majority of middle-class Chileans, many of whom had voted for him expecting not socialism but soak-the-rich populism. The problem was not Yarur, but the threat “spontaneous” seizures represented to a legal, orderly transition to socialism, with minimal political fallout.
Allende himself was never convinced that the movement at Yarur that culminated in “requisitioning” the factory was spontaneous. He was right. Many workers did not understand that this was what they were voting for when they agreed to strike. But once the government ratified the intent of the labor leadership, a Pandora's box had been opened. Yarur was the first large enterprise effectively expropriated through artificially induced labor conflict. And far from confining themselves to obvious, easy targets like this one, the ultras of the Socialist Party and their allies to the left simply moved along a path of least resistance, in the process scaring to death the very social class that needed to be divided and neutralized. It was left to an increasingly hapless Allende to try to pick up the political pieces, which is why he found himself leaning so heavily upon General Prats.
VIRTUALLY ALL this information is provided by Winn, but through a heavy filter of high literary Trotskyism, so that the careful reader has to keep sorting out the facts from the special pleading. Ex-Yarur, as the expropriated enterprise became known, was suppo;;- edly one of the great success stories of Allende's Chile (though not, Winn says, the only one). It all depends on how you measure success. Doubtless at Yarur a union-run factory was administered more humanely than before. Still, it is an odd definition of a factory's success that ignores the loss of vast sums of money. Yarur and other similar factories ran huge deficits, forcing the government to print so much paper currency that it set off hyperinflation, thereby undermining its political base. Of course, by restricting socialism to a matter of politics and culture, with no reference whatever to economics, terms like “success” and “failure” lose any real meaning, except to people obsessed with power as an end in itself.
Perhaps Winn's lyrical description of “workers' self-management” at Ex-Yarur is completely accurate. But it runs counter to almost everything discovered by all other students of the subject over the years. Yet worse than his precious, condescending prose style—a kind of parody of E. P. Thompson—is the manner in which he situates the Yarur experience in Chilean politics. For Winn, as for many Marxists, the “people” are that portion of the population that supports his agenda. Those who do not simply fail to figure in his account. Thus he writes off a substantial majority of Chileans who never voted for Allende or his coalition— few of whom, needless to say, possessed the wealth or social power of the Yarurs.
Nor is Marxism the only possible expression of political and economic reform in Chile. One would never guess from reading Winn's book that the Christian Democratic candidate in the 1970 elections, Radomiro Tomic, ran on a platform even more radical than Allende's, much less that his party had its own version of workers' self-management (“communitarianism”). Much of the difficulty between the Christian Democratic unions and workers and those controlled by the Socialist Party was produced by sectarianism and political exclusion, something Winn mentions only glancingly.
Moreover, to present the workers of Ex-Yarur as part of an independent force, a revolution “welling up from below,” is to divert attention from the crucial conflict in Chile. That was the conflict within the Popular Unity government: between, on one side, the leaders of Allende's own party and their allies further to the left, who favored breaking with the bourgeois-democratic political system and seizing power at the earliest possible date, and, on the other, the president himself, the Communists, and theother non-Marxist parties of the governing coalition, who believed in consolidation and compromise. Now from a purely theoretical standpoint, insurrectionary Marxism of some sort—had it existed in the way Winn says it did, and had it succeeded—might have produced a genuine revolution in Chile, much as it did in the Russia of 1917 (and with many of the same political consequences). But it would not have been the revolution that Allende had promised, and in which he no doubt sincerely believed. Unfortunately Winn wants it both ways. When Allende is trying to work through (or bend, or pervert) the existing legal structure, that is the democratic road to socialism (“from above”). When the workers are supposedly trying to seize power through factory occupations and begging for arms to confront their class enemies, that too is the democratic road to socialism (“from below”).
What actually happened is much easier to explain: Allende proved incapable of controlling the insurgent elements of his own coalition, who played into the hands of the far right and the military by raising the fear of wholesale expropriation in the heart of anybody with any property at all. The workers of Ex-Yarur were the pawns, not the protagonists, of history. And they were victims too, since after the coup they suffered not only political repression but also economic policies that destroyed their factory and others like it.
IV.
WHEN ALLENDE was elected in 1970, Chile had, proportionately, one of the largest public sectors in Latin America, second only to that of Cuba. The tendency toward state intervention in the economy began in the 1930s under a Popular Front government, but it continued under more conservative successors. It was accelerated during the Christian Democratic period; Frei's party made much of its commitment to a “third way” between capitalism and communism. Ironically, because of the larger ideological and strategic issues at stake—above all, because of the need to provide Latin America with a viable alternative to the Cuban revolution—the United States under Kennedy and Johnson embraced the Christian Democrats with enthusiasm, and showered Chile with funds to pay for land reform and other progressive innovations.
American support, combined with the higher copper prices caused by the Vietnam War, masked the essential truth of Chile's economic situation: that within its borders there were two countries. One lived inside the magic circle of corporatist privilege, including not merely industrialists, bankers, and major landowners, but public employees, peasants on “reformed” plots of land, and workers in unionized industries. Another was made up of the landless peasantry, unemployed (or unorganized) workers, and household servants. Chilean politics was conducted within the first circle; the others stood on the sidelines, kept there by policies that were progressive in name but often regressive in impact.
Even if Allende had not been elected, it would have been necessary in the 1970s to ask whether statist solutions were right for Chile—for reasons not only of economic growth, but also of social justice. Unfortunately such a reckoning was not allowed to happen before the great convulsion. Because Allende used statism as a weapon against his opponents, they attempted after his fall to eliminate it once and for all.
CHILE UNDER Pinochet became a great laboratory of neoconservative economics. Economists trained at the University of Chicago ruthlessly pared back government services, particularly in education and health. They also opened up Chile's markets, and in the process eliminated entire lines of national industry. The initial result seemed favorable. During the late 1970s, when the country was awash in money borrowed from Western banks recycling Arab and other oil money, it was common to speak of an “economic miracle” in Chile, of a boom provoked by the unprecedented embrace of free market principles. In a few short years, Chile went from being the wave of the future for the international left to being the country of choice for conservative politicians and economists in Western Europe and the United States.
The bubble burst in 1983, leaving Chile with widespread unemployment and one of the largest per capita debts of any country in the developing world. Christian Democratic economists such as Alejandro Foxley and Ricardo French-Davis may have the satisfaction of saying “I told you so” (which they did, in 1980, as proved by their contributions to the Valenzuela volume). And a mood of sober reappraisal has settled over the school of Chicago, both in Chile and the United States. Its work is represented by the papers collected in The National Economic Policies of Chile, edited by Gary M. Walton, dean of the school of business at the University of California, Davis.
These papers are most persuasive when they critically examine the system that the “Chicago boys” replaced; one, for example, shows the ridiculous extent to which non-economic criteria prevailed in the transport industry, benefiting not the poor, but relatively privileged groups. They are least convincing when they try to explain away or minimize the failures of the economic “reforms” instituted by the Chicago-trained economy minister, Sergio de Castro.
A number of general conclusions about the recent economic experience of Chile may be drawn. First, during most of the period from 1978 to 1983, Chilean currency was artificially pegged at 39 pesos to the dollar. Whatever else this is, it is not free market practice (though it had the political utility of sending the Chilean middle class on a huge spending spree for imported products, raising its morale and defusing its potential for political dissent). Over time many Chileans accumulated dollar-denominated debts, which increased overnight by 20 or 30 percent when the government was eventually forced to devalue the peso to its “true” level. The political consequences have included a resurgence of opposition politics since 1983. Second, the degree of privatization in Chile has been somewhat exaggerated. The rate declined sharply after 1981 when public-sector unions were able, in a relatively more liberalized atmosphere, to assert their interests. Third, even where free market principles were applied most extensively, the Chilean economy never became as “liberal” as the economy of the United States. Fourth, with all their deficiencies, some of the Chicago policies have had constructive results, notably the diversification of Chilean exports and a drastic drop in the rate of inflation. And finally, there have been—here is the escape hatch of every failed economic prophet—” extenuating circumstances.” In the case of Chile, they include a fourfold increase in oil prices and (after 1981) a disastrous fall in the price of copper.
Anyone reading these essays forearmed with a knowledge of recent Chilean history will be struck by the fact that in spite of their wide ideological and political differences, all three of the last Chilean presidents have failed to produce the kind of economic result they promised; Frei, in spite of extensive concessional aid from the United States and high copper prices; Allende, with all his exaggerated claims for socialism and economic planning, as well as his depletion of the foreign exchange reserves accumulated under Frei; and Pinochet, through the selective application of free market principles, the neutralization of the labor movement, and massive foreign borrowing. It would appear that nothing is so good for Chile as high copper prices and low energy prices, low interest rates and a strong commitment to the success of its government by American and other Western bankers and diplomats. But this means that a tidy, ideologically satisfying account of the Chilean economy—of the kind that would please leftist or rightist, statist or free marketeer, populist or liberal—is impossible.
Moreover, until Chile returns to democratic life, it simply will not be possible to have a reasonably objective discussion about its economic policy. Some of the things that Walton and his Chilean free marketeers are saying are being repeated sotto voce by social scientists associated with the Christian Democratic and Socialist parties. There has even been some talk in Socialist quarters about how the market might be used to create a more equitable distribution of income. But the opposition has too much at stake to admit publicly that Pinochet—or rather his technocrats—have done anything right.
As for the government and its supporters, most, with the exception of a few genuinely convinced ideologues, oppose state intervention in the economy not because it is inefficient, but because it can be used to curtail privilege just as easily as to shore it up. “Many of the economic policies applied during these years could not have been put in practice in a democratic environment,” Christian Democratic economist Rene Cortazar reminds his Friedmanite colleagues in the Walton volume. “Economic reforms and the political repression cannot be understood as two completely independent phenomena.”
STILL, that need not be the case. There is no necessary relationship between free market economics and political repression. Pinochet could just as easily go back to a corporatist economic system with heavy state participation— indeed, in some areas he has done so, inasmuch as the state has acquired the stock of most of the banks that failed after 1983. Judicially Chile is still a capitalist country, but functionally it is increasingly coming to resemble the Spanish state during the 1950s, in which economics were ruthlessly subordinated to considerations of political power.
Recently the economic indicators in Chile have begun to turn upward again, reviving government hopes and provoking opposition fears. The presumption is that if the situation improves sufficiently by the end of 1988, Pinochet can win his plebiscite. This seems unlikely. Repeated loans from bankers can keep the operation running, but they cannot re-solve the regime's basic problem, which is political. Pinochet dreams of a country ruled by him (and then, after his death, by people like him) in perpetuity. But this requires the permanent, systematic suppression of all the natural tendencies of Chilean politics.
Instead of resolving these issues, Chile has been lost in a search for painless short cuts to development, urged upon it by economic determinists of the most varied ideological hues. But the truth is that there is no successful Chilean road to socialism, or to capitalism either, that does not include the political freedoms that have been won by the nations most Chileans admire; the United States, Great Britain, France, and now (happily) Spain. Such a political system might be distinctly unexciting to foreigners. But it would be a vast improvement over the country's recent past, and certainly over what seems to lie in wait for it after 1988 or 1989.
This article originally appeared in the September 7, 1987, issue.