In 1970, Salvador Allende made history by becoming the first left-wing president in the world to be elected through democratic means. After an 18-year development the Popular Unity Party (where he competed for the candidacy against his friend Pablo Neruda) won the majority of votes, and the Chilean government began a transformation. A country that voted for an alternative to capitalism turned to the social movement through the “Chilean Path to Socialism.” It was an unprecedented situation in Latin America. Not only did this improve the living conditions of the Chilean people, but it was also a direct threat to the high echelons of economic power by testing their influence and turning private earnings towards social means.
A proof that the Chilean economic reorganization was on the right path came in the form of the parliament elections in March 1973, where most of the population responded to Allende’s goals. The Popular Unity party advanced until becoming the parliamentary majority. As this happened, the country’s elites saw their interests and privileges, as well as the United States’ intentions to stop the spread of Socialism, dissolve through democratic means. They reacted through the coup d’etat of September 11 of that same year, when a military regime, which resulted in one of the bloodiest dictatorships, was set in place.
The wounds left by Pinochet’s regime have yet to heal in Chilean society. The history of horror, repression, and unimaginable torture is easy to discover by anyone interested in uncovering the reason for the Latin America’s dictatorial era. However, there is one key player that aided the military junta that remains a mystery to most.
At the end of the 1950s, Chile’s Catholic University signed an academic exchange agreement with the University of Chicago. For decades, hundreds of students from both institutions were shaped under the ideology of the Chicago School, a thought process introduced by Milton Friedman, who led the Economics Department. This combination of idealized visions that attempt at showing a nonexistent link between free markets and political freedom, as well as a mindset that grossly assumes Capitalist apologetics. This mentality proposed what no country, regardless of how developed or underdeveloped, would allow: leave a nation’s development in the hands of the markets in the most liberal way.
Friedman’s vision wrongly perceives the market as a rational system of resource assignment, able to correct its unbalance in the long run. The author of Capitalism and Freedom (1962) and Free to Choose (1980) assured that the market was the sole answer to guaranteeing the people’s freedom and proposed to leave important areas such as education and healthcare in the hands of the private sector.
Once the military regime was violently installed in Chile, technocrats and economists from the Chicago School, referred by locals as the “Chicago Boys” took control of the national economy under the theories of Milton Friedman and Arnold Harberger. The results proved catastrophic. In less than five years, over half the population was buried in poverty. The unemployment rate went from 3.1%, prior to the coup, to 25% in a matter of four years. Inflation reached a historical peak of 341% in 1975 and the stratospheric rise in the cost of bread, transportation, and several basic products destroyed the Chilean quality of life.
“I have not been leading Chile’s economic policy! For over a year I have not felt flattered or amused by the powers assigned to me.”
More than 725 Chilean companies were privatized and handed to the economic elites of both countries. Among them was national mining corporation, a vital element in the region’s development. Unions, workers’ organizations, and anything that came in way of the regime was dismantled with the same ferocity as the installation of this power, through blood and fire. The free market invaded Chile with its full force using the recipe of the man who in 1976 would be awarded a Nobel prize for “his achievements in the fields of consumer, monetary history and theory, and for his demonstration of the complexity behind political stabilization.”
Despite Friedman negating any relation to Pinochet and the military regime until his death, declassified CIA documents and an investigation from the United States Senatorial Special Committee have confirmed that Milton and other Chicago economists were part of a planning process for the measure that were taken in Chile following the coup. Friedman visited the South American country at least twice. the last time was in 1975 when Augusto Pinochet welcomed him and his wife, Rose.
The apparent disconnection between the freedoms he defended during his intellectual career and the regime he counseled is proof that the cost of the free market is above any other kind of freedom, including that of development and human life.
The New York Times
“A Draconian Cure for Chile’s Economic Ills”, Business Week
“Economic Genocide in Chile: Open Letter to Milton Friedman and Arnold Harberger”, Gunder Frank, André
Translated by María Suárez