Pinochet's Chile: Military Rule, Economics, and Latin American Politics

Introduction: Authoritarian Traditions in Latin America

Latin America today is known not only for its unique culture rooted in the Spanish colonial legacy, but also for political instability, military coups, and political adventurism. It is enough to recall the economic collapse in Argentina in 2001, presidential elections in Venezuela and Peru, insurgency in Colombia and Bolivia, and similar events across the region. The militarist character of national governments forms a central theme of Gabriel García Márquez's famous novel One Hundred Years of Solitude, in which the author observes that nothing had changed for the working class since the wars of independence, despite all subsequent revolutions and military governments with populist slogans.

Latin America is characterized by unique political traditions that have little in common with the political institutions of the United States, despite the fact that the political systems of both Americas developed under broadly similar conditions during the same historical epoch — the struggle for independence from European colonial powers in the eighteenth and nineteenth centuries. Some authors, including José Piñera, argue that the "fathers of nations" in Latin America did not fight for the ideals of democracy, freedom, and equal opportunity that they had lacked under the Spanish Crown. It later became clear that the driving desire was for the colonial elite to become independent from the Crown in order to gain full control over domestic affairs in South America.

Due to the historical particularities and political climate in the colonies, the ambitions of the new hidalgos were broadly supported by the lower classes, who hoped to improve their circumstances. Simón Bolívar, Bernardo O'Higgins, and Antonio José de Sucre regarded Napoleonic France as a model state — an authoritarian regime led by a government of the "elite." Neither Bolívar nor Sucre considered constitutional government and civil society principles to be the most appropriate framework for Latin American states, since such principles and institutions would have limited their own power. As Piñera observes:

"It is one thing to know how to fight and another to govern. The Liberators (and their successors) did not anchor the young republics in the values of individual liberty, did not establish the rule of law, and did not limit the delegation of authority by the people to their democratic representatives. On the contrary, they maintained — and in some cases further improved on — the Spanish centralizing tradition." (Piñera, 409)

The Rise and Fall of Allende's Socialist Government

The authoritarian tradition of government has survived in Latin America to the present day, as corruption compounded by social problems and economic instability creates favorable conditions for the populism of charismatic political leaders. Victor Hugo's observation that "most commonly revolt is born of material circumstances" suits Latin America particularly well.

One of the most prominent examples of military dictatorship in Latin America is the regime of General Augusto Pinochet in Chile. Despite the cruelty of its repression and violations of human rights, the junta served as a form of political "resuscitation" for a country suffering from a declining economy and growing poverty, as Pinochet was able to restore the diplomatic ties that had been severed during Salvador Allende's time in office.

The victory of the socialists led by Salvador Allende in the presidential elections, and his subsequent nationalization policies, triggered an outflow of investment and further economic and political isolation. Allende cooperated with the Soviet Union, but he could not fully rely on Soviet aid, as the USSR was simultaneously subsidizing Eastern Europe and communist regimes across Asia and Africa. Despite his support among the lower classes, Allende's government proved unable to control the situation in the country, which ultimately led to the military coup organized by General Pinochet.

Pinochet's Junta: Repression and Political Consolidation

The Military Junta government, which established an authoritarian regime lasting 27 years, did not improve conditions in Chile but instead deepened both political and economic contradictions. It is now well established that the Pinochet regime was responsible for mass repression, persecution, and the deportation of political dissidents. More than 2,200 people are officially recognized as victims of the regime; according to unofficial estimates, the number of victims exceeds 32,000. The junta is often described as a government of the "strong hand and iron fist," but in reality it was a new government of adventurism, sustained by the national oligarchy and the military.

Notably, Pinochet's government attributed economic failures not only to the socialists led by Allende, but to all political parties, which it dismissed as dilettantes and demagogues. The junta banned all political parties, including the Christian Democrats and even the Nationalist Party.

Neoliberal Economic Policies and Their Social Costs

The junta's economic policies reflected its political ideology, promoting in practice the theory of neoliberalism and the open market — which in reality meant an absence of any control over the privatization of strategic enterprises and social infrastructure, and no monitoring of income distribution. These practices led to a growth of foreign loans and investment into Chile, which had dried up during Allende's tenure, but simultaneously resulted in the domination of foreign capital in the economy and the weakening of domestic production. The mining industry was privatized by large American corporations, which restored their traditional influence in that sector.

The economic and social costs of these policies were severe. Drawing on data compiled by Petras and Leiva, the record is damning:

"Pinochet's neoliberal economic policies' benefits have been sharply contested. In 1973, unemployment was only 4.3%. Following ten years of junta rule in 1983, unemployment skyrocketed to 22%. Real wages declined by more than 40%. In 1970, 20% of Chile's population lived in poverty. In 1990, in the last year of Pinochet's dictatorship, poverty had doubled to 40%. Between 1982 and 1983, the GDP dropped 19%. In 1970, the daily diet of the poorest 40 percent of the population contained 2,019 calories. By 1980 this had fallen to 1,751, and by 1990 it was down to 1,629. Furthermore, the percentage of Chileans without adequate housing increased from 27 to 40 percent between 1972 and 1988, despite the government's boast that the new economy would solve homelessness. Meanwhile, the wealthy were benefiting enormously. In 1970, the richest one-fifth of the population controlled 45% of the wealth compared to 7.6% for the poorest one-fifth. In 1989, the richest one-fifth controlled 55% of the wealth while the poorest one-fifth controlled only 4.4%." (Petras & Leiva, 1994)

The Chicago Boys — the team of economists who shaped the junta's monetary and financial sector policies — proved to be shortsighted in their approach. The returns from increased investment and foreign loans were incomparable to the long-term costs. By the time Pinochet resigned, Chile's foreign debt had reached 70% of GDP — a staggering figure even by Latin American standards.