From Pinochet to the 'Third Way'

Taylor Marcus

Description

This is a comprehensive analysis of three decades of neoliberal policies in Chile, from the Pinochet dictatorship until today.



Chile is often described as a 'model' of neoliberal development policy. Marcus Taylor questions this description. Examining the contradictions of neoliberlism, he demonstrates how it has created a society that is deeply ridden with inequalities.



Taylor shows how the tensions that arose from this social inequality led to the emergence of a 'Third Way' neoliberalism in the post-dictatorship period. Taylor argues that this new development paradigm has failed. This is a result of the inability of 'Third Way' neoliberalism to transform social relationships and institutions.



The nature of this failure affects the direction of popular movements for social change in Latin America during a time of renewed social and political upheaval.
Acknowledgements

Introduction. Neoliberalism and Social Transformation

1. The Rise and Crisis of the Chilean National-Developmentalist State

2. Chicago to the Rescue – The Emergence of Neoliberalism in Chile

3. Neoliberalism and Creative Destruction, 1973-1989

4. From Retrenchment to the ‘Seven Modernisations’ – The Great Transformation of Welfare Institutions

5. Towards a Third Way? - Politics and Policy in Post-Dictatorship Chile

6. Production, Power and Exports – The Political Economy of Post-Dictatorship Chile

7. Labour Institutions and the Politics of Flexibilisation

8. Growth with Equity? Social Policy and Anti-Poverty Programmes, 1990-2003

9. The Uncertain Future of Neoliberalism

References

Index

=

Sujets

• Political Process
• Political Science
• América del Sur
• South America
• Latin America
• Central America
• SS Central America

Informations

• Publié par: Pluto Press
• Date de parution: 20 juin 2006
• Nombre de lectures: 1
• EAN13: 9781849642910
• Langue: English

Extrait

From Pinochet to the ‘Third Way’

Neoliberalism and Social Transformation in Chile

MARCUS TAYLOR

P Pluto Press LONDON • ANN ARBOR, MI

First published 2006 by Pluto Press 345 Archway Road, London N6 5AA and 839 Greene Street, Ann Arbor, MI 48106

www.plutobooks.com

Copyright © Marcus Taylor 2006

The right of Marcus Taylor to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.

British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library

ISBN ISBN

0 7453 2451 7 hardback 0 7453 2450 9 paperback

Library of Congress Cataloging in Publication Data applied for

10

9

8

7

6

5

4

3

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1

Designed and produced for Pluto Press by Chase Publishing Services Ltd, Fortescue, Sidmouth, EX10 9QG, England Typeset from disk by Stanford DTP Services, Northampton, England Printed and bound in the European Union by Antony Rowe Ltd, Chippenham and Eastbourne, England

For Susanne

List of Figures and Tables Acknowledgements

Cont

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nt

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Introduction: Neoliberalism and Social Transformation  Three Decades of Chilean Neoliberal Models  Key Questions and the Argument of the Book  The Layout of the Book

1

The Rise and Crisis of National Developmentalism Capitalist Development, Social Structures and the Chilean State Frei’s ‘Revolution in Liberty’ The Allende Regime and the Crisis of the State Summary

2 ‘Chicago to the Rescue’ – The Emergence of Neoliberalism in Chile  The Materialisation of the Neoliberal Project in Chile  From Neoclassicism to Neoliberalism  The Economics of Nowhere and the Politics of Chile  The State and Neoliberalism  Capitalism and the Irrationalities of Neoliberalism  Summary

3

Neoliberalism and ‘Creative Destruction’, 1973–89 From Gradualist Policy to ‘Creative Destruction’, 1973–75 The Impact of Creative Destruction Economic Liberalisation and the Primacy of Money Capital Institutionalising Class Relations From Miracle to Crisis and the Collapse of Orthodox Monetarism Responding to the Debt Crisis Second Wave Neoliberalism and the New ‘Economic Miracle’ Summary

x xi

1 1 5 9

11

11 20 23 28

30 33 34 38 42 45 51

53 53 57

60 64

68 69

71 75

viii From Pinochet to the ‘Third Way’

4

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6

From Retrenchment to the ‘Seven Modernisations’ – The Great Transformation of Welfare Institutions Retrenchment and Initial Reforms, 1973–78 Targeted Social Programmes From Social Assistance to the ‘Seven Modernisations’ Neoliberalism and Welfare Institutions – Motivations and Theory Education Reforms Healthcare – The Creation of a Dualised System The Privatisation of Pensions Summary

Towards a Third Way? Power and Politics in Post Dictatorship Chile Political Protest and the Defeat of the Dictatorship Democratisation and the Limits to the PostDictatorship State Authoritarian Enclaves and the Form of the PostDictatorship State Organised Interests and the Exercise of Power Capital Accumulation and the State The Growth with Equity Strategy – A Chilean ‘Third Way’? Summary

Production, Power and Exports – The Political Economy of PostDictatorship Chile Neoliberalism and Economic Policy in PostDictatorship Chile The Social Determinants of the Chilean Export Boom, 1990–97 Contradictions of the Export Boom 1: Economic Dualisation Contradictions of the Export Boom 2: Enduring Inequality Contradictions of the Export Boom 3 – Overproduction and the Asian Crisis After the Crisis – New Policies for an Uncertain Future? The Return to Exportled Growth Summary

77 78 81 84

85 89 92 95 98

99 100

103

104 107 110

113 119

121

123

126

132

136

139 144 147 149

7

8

9

Contents ix

Labour Institutions and the Politics of Flexibilisation Labour Flexibility – Theoretical Divisions The Concertacin and Labour Reform in the 1990s The First Reforms, 1990–93 Flexibility in Practice The Political Ramifications of Labour Flexibilisation The Lagos Government and the 2001 Reforms Strengths and Limits of the 2001 Labour Reform The End of Labour Reform? Summary

Growth with Equity? Social Policy and AntiPoverty Programmes, 1990–2003 Social Policy and the ‘Growth with Equity’ Strategy The Limits to Social Policy Reforms Reforming the Education Reforms Health Provision within the Dualised System Pensions and Social Security FOSIS – The Prototype AntiPoverty Policy Summary

The Uncertain Future of Neoliberalism

References Index

151 153 156 159 161 164 165 167 168 170

172 173 176 180 184 187 190 195

197

203 219

3.1 3.2 4.1 6.1 6.2 6.3 6.4 7.1 8.1 8.2

1.1 3.1 3.2 3.3 3.4 6.1 6.2 6.3 6.4 6.5 7.1 8.1 8.2

8.3

List of Figures and Tables

FIGURES

Unemployment 1975–82 Unemployment 1981–91 Value of State Education Subsidy (1982 = 100) External Financing – Net Direct Investment Evolution of Poverty and Indigence, 1990–2000 Private External Debt Value of Mining Exports National Unemployment Rate Public Social Spending Per Capita, 1989–2000 Distribution of Autonomous and ‘Total’ Income by Quintile, 1998

TABLES

Urban Unionisation in Chile, 1932–73 Real Wage Index, 1970–82 Distribution of Payments to Capital by Main Sectors Concentration in the Export Sector by 1988 Real Wage Index, 1982–90 (1970 = 100) Chilean GDP Growth, 1990–99 Quantum Growth of Exports by Period Distribution of Income by Decile, 1990–2000 Index of Real Wages (1970 = 100) Annual GDP Increase Evolution of Unionisation, 1988–96 Public Social Expenditure by Sector, 1989–2000 Percentage of Educational Coverage by Income Quintile, 1996 Percentage of Income Quintile in Schools Ranked in Quintiles According to Success in State Mathematics Tests, 1996

x

57 71 91 131 139 142 147 170 175

179

14 60 61 62 71 125 135 137 138 143 164 176

183

183

Acknowledgements

Many people have been instrumental to the completion of this book. My fullest thanks go to Simon Clarke, for his instruction and close reading of earlier versions. Ronaldo Munck and Mike Neary also provided very useful commentaries at that stage. On the Chilean side, Daniel Chernilo supplied logistical support and delivered insightful and constructive critiques of numerous chapters. Octavio Avendaño offered lodgings and excellent companionship, and JosÉ Bengoa, Manuel Riesco, Cristiân Paiva and Guillermo de la Peña all provided help or advice at various points during my research stays in Chile. On the Montreal side, JeanPhilippe Warren has been a source of constant and muchwelcomed humour and enthusiasm, which greatly aided the final stages of writing. From other locations, Guido Starosta, Leigh Binford and Nancy Churchill gave much appreciated support in different ways. Last, but far from least, my partner Susanne Soederberg has provided bountiful inspiration and encouragement, and it is to her that I dedicate the book.

xi

Introduction: Neoliberalism and Social Transformation

The primary concern of this book is to provide a comprehensive and critical analysis of the emergence and unfolding of neoliberalism in Chile. This is undertaken as a way to deepen our understanding of the social transformations and consequences inherent to this political practice at a global level. Chile provides an excellent case study through which to examine the nature and impact of neoliberalism for several reasons. On the one hand, Chile was the rst country in either the developed or developing world in which a thorough programme of neoliberal restructuring was initiated. The privileged position of neoliberal technocrats in the policymaking bodies of the Pinochet dictatorship between 1975 and 1989 gave them an unparalleled opportunity to undertake farreaching reforms in conditions of political impunity. As a consequence, neoliberal restructuring proceeded further and more rapidly in Chile than in any other country. On the other hand, the Chilean experience of neoliberalism has since its inception played an extremely signicant role in inuencing international debates on development strategy. In spite of a tumultuous history over the last 30 years, the various permutations of neoliberalism in Chile have repeatedly been heralded as models of policy practice worthy of emulation throughout the developing world. Much like the East Asian model of development, which was controversially lauded by international institutions such as the World Bank as proof of the virtues of marketled development (World Bank 1993a; cf. Burkett and HartLandsberg 2000), the Chilean experience has been a touchstone for international debates over the salience of neoliberalism at a global level (Drake and Jaksic 1999; FfrenchDavis and Stallings 2001). It is useful to briey overview the three primary incarnations of the Chilean model before introducing the analytical themes addressed in the body of the book.

THREE DECADES OF CHILEAN NEOLIBERAL MODELS

Two years after the violent overthrow of Socialist president Salvador Allende through a military coup led by Augusto Pinochet in September 1973, a pioneering group of economists introduced a new

1

2 From Pinochet to the ‘Third Way’

and radical policy orientation in Chile. Since the 1930s the Chilean political economy was characterised by a structuralist approach to development, prevalent across much of Latin America, which sanctioned the formation and expansion of state institutions aimed at promoting industrialisation, regulating social conicts and reshaping social structures. The new policymakers in the authoritarian regime, however, professed the need to reverse this trend through a rapid and uncompromising restructuring of social institutions. By transforming the relationships between state and society and between social classes, the intention of these reforms was to strengthen the regulatory role that market forces played in the processes of capitalist development in Chile. The market, they argued, should be freed from external constraints in order to allow its selfregulatory dynamic to provide a more rational and efcient context for social interactions. Not only would this create a more prosperous economy, but would also promote human freedom and social harmony. At the time, these proposals for reform  later given the title of neoliberalism  were widely regarded as peculiarly unorthodox and profoundly misguided. This mistrust was due in no small part to the institutionally engrained Keynesian conviction that direct state intervention in the economy is the only means to ensure stable growth within capitalist societies. Indeed, two years before the introduction of this programme in Chile, US president Richard Nixon highlighted the global hegemony of Keynesian thought in his declaration that we are all Keynesians now. Nonetheless, the programme of social restructuring undertaken in Chile  predicated on the teachings of Chicago School economists  attracted a small yet vocal set of domestic and international admirers and proponents who believed it offered a solution not only to the economic and social crisis in Chile, but also to the ills of capitalist societies on a global scale. Buoyed by the proclaimed successes of the strategy in Chile, which they claimed contrasted greatly with the socioeconomic malaise aficting other developing countries, proponents soon referred to it as the Chilean model and claimed that it provided a blueprint for other countries to follow. Francisco Orrego, a leading regime ideologue and early proponent of the idea of a Chilean model, stated as early as 1975 that:

Chilean action can assume leadership characteristics … and the Third World will be able to understand and benefit from the Chilean experience (cited in Frank 1975: 19).