The Lessons and the Legacy of a Dark Decade
Volk, Steven
Santiago was slowly emerging from its Southern Hemisphere winter into a promising spring. For a short while, the air would be sweet and clear before the summer sun and smog gained the upper...
...Los Angeles Times, April 8, 1974...
...If you didn't, Big Brother was always watching...
...The Navy had mutinied early that morning in Valparaiso...
...2 Thousands more were imprisoned in Santiago's two largest sports stadiums, on naval ships in Valparaiso and Concepci6n, and in hastily constructed prison camps...
...109 (August 23-28, 1979...
...Indeed, it was a necessary complement...
...3 9 * Social discipline, not the development of critical faculties, has become the goal of elementary education...
...Lands formerly sown to basic food crops are now the source of grapes, peaches and pears consumed abroad...
...It is no longer permitted to operate branches in the provinces...
...Those who knew and could teach the past were particular targets...
...6. Mensaje (Santiago), December 1973...
...Agricultural training schools, for example, have already been turned over to the National Agricultural Society (SNA), a private association of large landowners, and its counterpart in industry, the Society for Industrial Development (SOFOFA), has taken over industrial training schools...
...Nash Torres, "La reforma previsional," Chile-Amirica (Rome), Nos...
...84-85 (1983), p. 23...
...Two Hawker Hunter jets approached La Moneda, passing low over the building but holding their fire, probing Allende's promise never to abandon his office...
...Institutionalizing the Dictatorship Pinochet's legacy to Chile lies as much in the political sphere as in the economic...
...It is not hyperbole to claim that the military government sees ignorance as a goal of the schooling system...
...The Chicago Boys favored the survival of the economically fittest, determined in an unfettered market, and a sharply reduced role for the state in economic affairs...
...They released their rockets, two each from both planes...
...Instead, it began to die of starvation...
...During its early years, the junta and its staunch civilian backers could agree on the need to "exterminate Marxism"--as Pinochet crudely put it-but on little else...
...War Is Peace For 10 years, the military has waged war on its own population...
...Chile Economic News(New York), May 1981...
...Military Men: Now Is the Time to Act," another insisted...
...See Dahse, Mapa, pp...
...In 1975, the Chicago Boys set out to drastically remold the Chilean economy in three major ways: 0 Removing the state from the economy: A strong state role in the economy has been an old Chilean tradition...
...At the university level,the government passed five decree laws between December 1980 and February 1981 allowing Pinochet to completely restructure the system...
...In this, its first war, the junta could rely on support from a variety of sectors, some who directly benefitted from the new policies-and some who only thought they would...
...Ibid., pp...
...3 In essence, their policies were based on the notion of comparative advantage: countries should produce what they are best able to produce, and use the income thus generated to finance other purchases...
...For a short while, the air would be sweet and clear before the summer sun and smog gained the upper hand...
...These included the top banks in both the Cruzat-Larrain empire (Banco de Santiago) and the Vial network (BHC, Banco de Chile...
...It was like watching a prize fighter pummel a weak, old man...
...138-147...
...on the roof of the Catholic University, soldiers crouched behind machine gun emplacements...
...The Free Market Hits the Fan By 1981, Chile was again in the midst of a severe recession, with unemployment above 30% (including those on the Minimum Employment Program), industrial production at 5060% of 1969 levels, and a trade deficit of nearly $3 billion...
...If Pinochet could make the trains run on time, they would accept the fact that he murdered the brakemen...
...Yes, Chileans will go to the polls in 1989 to elect a powerless congress and in 1997 to elect a president...
...8 Which Way to Go...
...Without any desire to expand political support, there were no constraints on adopting a severely rigid economic model...
...We really thought these lend9NACLA Report ers, who were very conscious of what they were doing and had great market experience, would monitor our institutions themselves...
...2 4 Help From Abroad As the economy expanded and the financial groups rumbled along in the late 1970s, the first hints of a gathering economic storm began to appear...
...Theirs is truly a lost generation educationally...
...New private concerns, known as Administradores de Fondos Previsionales (AFP), would take over...
...After literally months of preparations, when would the military act...
...This state lacked a national anthem-no one sang anymore...
...On the other hand, the constitution does provide a clear, if chilling, glimpse of what Pinochet would like Chile to look like if his rule continues to the end of the century, as it theoretically could...
...First, power would rest in his hands alone, not with the junta of four service commanders...
...The Times itself reported 2,000 deaths, and the U.S...
...Not content to do away with some players in the political game, Pinochet wanted to disband the game itself...
...Imports of non-essential goods, from perfume to televisions, almost quadrupled during the military's tenure...
...Two years of shock plan and four more of free market competition had rid the economy of any undesirable "fat...
...Pinochet appoints all rectors to the universities (a majority of whom are still military officers), and these have discretionary powers to purge faculty, staff or students at will...
...5-6 (May-August 1982), p. 22...
...While traditional industry and agriculture have decayed-intended victims of Chicago Boy economics--finance and speculation have prospered...
...27-49...
...The groups' skill in preying upon the weak earned them names usually reserved for street gangs: "piranhas," "crocodiles," and "sharks...
...The regime's 1980 decision to "reform" the nation's social security and pension laws provides the clearest picture of how the government 9Sept/Oct 1983 Unemployed workers meet in parish house, Santiago, 1983...
...As early as June 1974, Pinochet was able to change his title from president of the junta to president of the republic...
...All this from a press that Allende's opponents-including the Nixon Administration -insisted was under the government's thumb...
...Society at large would ensure the groups' survival...
...Fernando Dahse, Mapa de la extrema riqueza (Santiago: Editorial Aconcagua, 1979), pp...
...One educational economist frequently cited by the regime notes that "classrooms can instill in a student a notion of hierarchy, respect for authority, and the habits of good workmanship...
...Even as this is being written, thousands of protesters confront Army troops for the first time in a decade, and the general hastily shuffles and reshuffles his cabinet attempting to quell the incessant clamor for a return to democracy...
...Almost none of that money went toward productive purposes...
...In addition to establishing anti-communism as a quasi-state religion and placing "national security" above individual rights, the constitution breaks sharply with Chile's political traditions dating back to the 1890s: namely, a strong congress with considerable leverage over the executive, and a level of popular participation in politics quite rare in the hemisphere...
...Dawson Island, a desolate strip of land just a short flight from Antarctica, became the frigid home for hundreds of the UP's top leaders...
...Within four months of the coup, the cost of essential food stuffs had risen 400-500...
...While some may have served to create a more functional capitalist economy, the general effect has been nothing short of disastrous...
...When questioned about press censorship and the total ban on political activities, a junta member remarked, "That is the price that journalists and the public will have to pay for a while for having achieved other liberties: the liberty to be able to think in the future...
...In its first four years, the junta received $1.1 billion in U.S...
...Throughout the entire 1977-82 period, Chile was using nearly all its foreign loans to cover the trade imbalance or to pay interest and service fees on the debt itself...
...InJanuary, it forced two banks into liquidation, took over the administration of four others and appointed government administrators in another two...
...Those who had argued for mobilizing a popular base of support for the military regime, or who wanted to expand the role of civilians, found themselves robbed of potential leaders...
...And the financial groups have amassed so much power in the last 10 years that any change which affects their interests will be that much harder to achieve...
...The Orwellian nightmare forced upon Chile by Pinochet and the military, by the economically powerful and the U.S...
...Chicago, Chicago Once the economy had been run through the wringer of recession, it was time to rebuild along new lines...
...Again and again the planes returned...
...Yet the regime's real goal is to alter the way Chileans behave in society so that the rules become an afterthought, a line of final defense...
...Academic freedom flourishes in Chile, according to the regime, because now anyone wealthy enough to open a private academy is permitted to do so...
...income has been so radically redistributed that Chile's internal market, always small, is now severely restricted...
...44-58...
...95 (Santiago: FLACSO, 1981), p. 37...
...Democracy is the best pot for growing Marxism," he once remarked...
...Ibid., p. 24...
...The poor will be trained to be "good workers and...
...By 1980, Pinochet was ready to institutionalize his one-man rule and implement his notion of democracy as "authoritarian, protected [and] technocratic...
...3. For a description of the Dawson Island camp, see Samuel Chavkin, The Murder of Chile (New York: Everest House, 1982), pp...
...Obviously, statistical information itself can be disputed based on the methodology employed...
...rents had risen tenfold...
...In 1978, his Consulta Nacional, or national plebiscite, for all its irregularities and possible fraud, did suggest that the regime still enjoyed considerable support...
...Ignorance Is Strength If the government has its way, Chileans will no longer have the ability to think in the future...
...The country's disastrous economic situation, combined with mounting political unrest, will undoubtedly force even Chile's staunch free marketeers to adopt a more flexible approach...
...This dark legacy is the subject of our analysis...
...Investment in real estate (property values can double and triple over a few months), the stock market and all manner of banks and financial institutions, have become the heart of the Chilean economy...
...Only those fields which are most highly remunerated (law, architecture, civil engineering, etc...
...While the 75% "yes" 11 vote can hardly be taken seriously under conditions of absolute government control of the media and polling places, a large number of Chileans did mark the "yes" box next to the Chilean flag, pledging to "support President Pinochet in his defense of the dignity of Chile...
...The junta's early economic measures were equally heavy-handed, designed to punish those 4Sept/lOct 193 General Augusto Pinochet, Santiago, 1982 deemed responsible for the UP years...
...It is this tradition that the Chicago Boys set out to end...
...because it requires that any constitutional amendment which diminishes the power of the president be approved by the president...
...2 8 * The junta's decision to stress production for export over production for the internal market- in spite of a monetary policy which discouraged exports-made Chile fully vulnerable to the ravages of the worldwide recession of 1981-83...
...4 1 13NACLA Report Since this is the case, there is no longer any need to train students in the provinces...
...Schwember and Bear, "Free Market," p. 18...
...government...
...It is estimated that thousands were killed during the first weeks after the coup...
...Streets, buildings and shantytowns were renamed...
...and multilateral aid, had been almost completely cut off...
...It is the mark of a radically reactionary movement that it not only attempts to mold the present, but will not rest until it has uprooted the past...
...Marfia Olivia Monckeberg, "AFP: Las nueve de la fama," Andlisis, March 1983, pp...
...But for all of.Pinochet's efforts, it now appears certain that he has been unable to cajole or bludgeon the people of Chile into accepting a permanent system of economic exclusion and political disenfranchisement...
...The answer is yes-and no...
...In 1977, he could outlaw the two remaining political parties of any significance, the Christian Democrats and the National Party, without fearing a serious backlash...
...Inflation rate measured as of September 1976...
...During that year, the government spent 50% more per capita on the defense ministry than on education...
...There were two essential ingredients to Pinochet's political model...
...Chile's extreme right-wing parties combined with the Christian Democrats to offer the support of the wealthy and a substantial part of the middle class...
...They appeared again...
...The shock plan didn't just slow economic growth, it stopped it...
...It establishes the outer limits of what is to be allowed...
...The two most important financial groups in Chile are the Cruzat-Larrain clan and the Vial family, who share a common heritage in the Chilean Mortgage Bank (BHC...
...The government is proud of its success in stimulating non-traditional exports as a new source of foreign exchange...
...When white flour was in short supply during the Popular Unity government because of a credit blockade by the United States, bakers began to market pumpernickel bread...
...As U.S...
...one ordered...
...Within one year after the system was created, 70% of all social security and pension funds had been placed with only four AFPs controlled by two economic groups: CruzatLarrafn and Vial...
...When the university "reforms" are fully implemented, the entire university system will serve a mere 20,000 students...
...Would this be the end of Chicago-style economics in Chile...
...3 To reach its goal, the military began to issue a series of social and political reforms"modernizations," as the regime's supporters euphemistically referred to them...
...We were wrong...
...Pinochet has lasted much longer than anyone initially thought possible...
...But not now...
...3 7 * Education is to be "privatized"-actually turned over to the private sector, with municipalities retaining only those schools which are unprofitable...
...In April, Pinochet forced his economics minister, Sergio de Castro, a leading star in the Chicago firmament, to resign...
...Was the government reasserting control over the financial clans...
...Funds were flowing into speculation, not productive investment...
...But Chile must now import 60% of its wheat needs...
...The decision to implement both models marked Pinochet's second war...
...By 1981, only 12 firms remained within the state-owned sector...
...Between the roofs of the buildings which separated my home from the presidential palace, I saw the planes arc high over the city and then gather speed as they neared their target...
...For the 1974-80 period, the rate of investment in Chile was one of the lowest in the developing world and far below Latin American averages...
...It was quiet outside, but something was very wrong...
...The second war, whose first volley was fired in April 1975, was waged to radically restructure Chile's economy, its political models and the social behavior of its people...
...Latin America Weekly Report, January 21, 1983...
...Others, right-wing politicians and officers, argued for a more classically fascist or corporativist regime, mobilizing a broad base of popular support behind a nationalistic military...
...Only a few blocks from La Moneda (the presidential palace), my apartment was in a new highrise directly behind the Catholic University...
...Alexis Guardia, et al., "La deuda externa chilena 1974-1982 crea la necesidad de una renegociaci6n global," Chile-Amirica, Nos...
...12 fields in all-will require university-level and professional training...
...By the end of 1976, nearly 50% of the nation's economic capacity stood idle.' 0 The key point to understand about the shock plan is that, unlike the equally severe recession of 1981-83, the 1975-76 recession was desired...
...What emerged, however, were larger and larger conglomerates, rather than investments in new plants or technologies...
...Only six groups controlled two-thirds of Chile's top 250 firms...
...But nowhere is the regime's desire to change the behavior of Chile's citizens more apparent than in Pinochet's educational reforms...
...Why should Las Condes' taxes be used to finance the education of someone in Pudahuel [a working class neighborhood...
...When would the other shoe drop...
...See also CEPAL, Las empresas transnacionales en la economic de Chile, 1974-1980 (Santiago: United Nations, 1983...
...Still, notwithstanding Pinochet's determination to remain in power and his ability to inflict pain on those who want him out, most observers now sense that he is reaching the end of the line...
...More than 20,000 students were expelled...
...After more appeals carried over fewer and fewer stations-one literally could hear the progovernment stations being bombed off the airAllende himself came on...
...Nearly a year after the coup, Pinochet was still threatening that all the regime's opponents would be "crushed and made to disappear...
...Embassy counted some 5,000...
...74-75 (1981), pp...
...A Review of Chile's Economic Model, 1973-1980," LA WG Letter, Vol...
...Even if Pinochet were forced out tomorrow, he would leave behind a legacy which will take years to undo...
...The others, including nearly every branch of the social sciences and art, simply will not be taught...
...Economic models can be modified, but how do you feed people when the land is no longer sown to wheat or beans...
...Prominent doctors associated with the rightwing National Party sternly warned TV viewers of the dangers of eating dark breads...
...The new constitution gives the president the power to appoint one-third of the senate, all judges on the supreme court and in appellate courts, the intendants of all regions and the mayors of all towns...
...The first, which began on September 11, 1973 and lasted until mid-1975,was one of widespread, vicious retaliation against the Popular Unity government, its leaders, supporters, symbols, culture and ideology...
...Anyone who belonged to these previously legitimate political entities was considered a criminal and became a target of the junta's vengeance...
...Now, there is no bread...
...The full text of the constitution is printed in ChileAmirica, Nos...
...Instead it was the prelude to war...
...Marcela Gajardo, "El sistema educacional," ChileAmirica, Nos...
...Copper was still Chile's premier product, and sales plummeted with the recession...
...44, 46...
...Besides ridding itself of the burden of contributing to the workers' social security and pension plans, the regime also removed the state from administration and oversight of these plans...
...Foreign Assistance Program, Fiscal Year 1978, Part I: Latin America(Washington, D.C.: Center for International Policy, 1978), pp...
...El Mercurio (Santiago), June 17, 1980...
...Then I saw them: on the corner, four Army soldiers with submachine guns and white arm bands...
...2 0 In the boom years between 1976 and 1979, these financial groups began to snap up weaker firms-the victims of the government's survivalof-the-fittest policies...
...In the 1960s, Fernando Larrain, Javier Vial and Manuel Cruzat Infante-the "piranhas"--began to build an empire that would attract the support and advice of those same economists soon to be known as the Chicago Boys...
...Article 8 of the constitution, for example, outlaws any organization or person proposing doctrines which threaten "the family...or a concept of society, the State or the legal order.., based on the notion of class conflict...
...The Central Labor Confederation (CUT) was banned, and workers' rights severely limited...
...This was a society in which everyone knew one's own place, what to do and what to think...
...In others, firms producing communications and household appliances, for example, industries created by the state sector thrived and were eventually sold to the private sector.' By 1983, the military government had virtually removed all tariff barriers, opening Chile's doors to stiff competition from imports...
...2 6 In fact, it seems that the banks could have cared less...
...It was a war with no sense of direction and no goal other than the destruction of what came before...
...Chilean economists such as Rolf Liiders, Sergio de Castro and Pablo Baraona soon became known as the "Chicago Boys," occupying the government's top economic portfolios and designing a set of policies unique in their rigid adherence to a free market model...
...Chile has become a country which speculates rather than produces, which gambles rather than invests...
...The wealthy, however, did not import machinery or technology...
...40-41...
...The junta also could rely on the support of the U.S...
...3 2 On September 11, seven years after the coup, Chileans were asked to vote on a new constitution that would keep Pinochet in the presidency until 1989, allow a military junta to appoint the next president to Relative of disappeared, Santiago, 1980.NACLA Report serve until 1997 and legitimize the dictatorship's monopoly of executive and legislative power...
...It should have been a season of renewal and hope...
...If the idea was to punish the poor and exclude even middle class sectors from the rewards of the new economic strategy, then broad political support could hardly be expected...
...The job was entrusted to a team of economists from the conservative Catholic University of Santiago...
...9. See, for example, Latin America (London), March 14, 1975...
...3 8 * Any education beyond the primary level is seen as superfluous for the vast majority of Chileans...
...People throughout the world shuddered at the sight of full-color news photos of soldiers heaving books and magazines into huge street bonfires...
...3 One can look at the constitution of 1980 as a farce or as the first clear example of the military's attempt to create a new institutional order in Chile...
...2 7 * The Chicago Boys had insisted on an overvaluedpeso since 1979, making imports relatively cheap and exports increasingly uncompetitive...
...Explains a former economics minister of Chile, "There were foreign banks lending extremely high amounts to our banking system...
...See Barbara Stallings, Class Conflict and Economic Development in Chile, 1958-1973 (Stanford: Stanford University Press, 1978), p. 156...
...Increasingly dependent on a handful of unreliable exports, Chile has been confirmed, in the words of one analyst, as "a hewer of wood and a drawer of water...
...good patriots," the wealthy, to earn more money...
...I ran to the radio and flipped through a few silent pro-government stations before hitting one owned by the Socialist Party...
...The shock plan sought to induce a recession that would slow the production of goods and services, shrink the money supply and force the weaker producers into bankruptcy...
...Latin America Regional Report- Southern Cone, April 22, 1983...
...But he was hardly necessary, for most citizens had internalized his rules...
...A perfect marriage of interests: the banks would lend to Chile and other developing countries, and Chile would mask its budding problems in a flood of international loans...
...and because most of the freedoms it consecrates can be wiped out by applying vague, ideological Catch-22s...
...Jos6 Aldunate andJaime Rufz-Tagle, "La casera y su economia de mercado," Mensaje, November 1980...
...Ibid., p. 31...
...It is a farce because it can be unilaterally amended by the military until 1989...
...66-67 (1980), pp...
...The clearest indication of this new economic direction was the April 1975 unveiling of the "Plan for Economic Recovery," commonly called the "shock plan...
...To the first war's victims were added all civilian politicians, large sectors of the middle class and even many industrialists and landowners...
...7, nos...
...it was the conscious policy of the government...
...Although the 1973 coup witnessed an immediate assault on the living standards of workers and the poor, the economy still limped along with many of its traditional problems, including an inflation rate which soared above 600% a year by 1974...
...It succeeded...
...At times, they can even teach one to read, write and do arithmetic...
...Indirectly, the president will control the naming of all governors and the members of the Constitutional Tribunal, as well as many new advisory bodies...
...In 1980 the Chilean military reversed a universally accepted belief that the state should encourage the expanded education of its citizens...
...Second, the shape and function of agricultural production in Chile has changed dramatically...
...Thomas G. Sanders, Education and Authoritarianism in the Southern Cone, American University Field Staff Reports (Hanover, NH: AUFS, 1981), p. 12...
...Nor will the Chilean people be allowed to use these limited elections to seriously change their own society...
...For all its grizzly attention to tearing down the old, there was no clear vision of what to put in its place...
...The socialist radio called on the workers to be calm, go to their work sites and defend the 2Sept/Oct 1983 3 government that had defended them...
...Chile's industrial sector has been crippled...
...39-63...
...2. Estimates of the number of deaths in Chile during the coup ranged from a low of 513, as reported by thejunta on October 9, 1973, to more than 15,000 according to Harald Edelstam, Swedish Ambassador to Chile (The New York Times, December 11, 1973...
...Even though the junta beckoned with favorable terms, only $915 million in foreign investment entered the country between 1974 and 1980.30 By early 1983, the government could either sit on the sidelines and watch the economy collapse, or set aside its orthodoxy and intervene...
...Chile News: Economic and Financial Survey (Santiago), October 10, 1977...
...When many of the banks affiliated with AFPs went under in January 1983, they took with them the security of hundreds of thousands of workers...
...The foreign banks finally saw the dark clouds gathering and cut back their lending to Chile in 1982.29 * Foreign investors showed no interest in taking up the slack left by Chile's low internal rate of investment...
...Much has been written about the Chicago Boys' theories, variously described as neo-liberal, laissez-faire, free market or orthodox...
...The rush-hour traffic flowed out of the city, not into it...
...2 3 This is hardly a minor point, as these forced savings from the workers-employer contributions to the plans stopped almost completely-constitute perhaps the largest single source of investment capital in the nation...
...The powers of congress, meanwhile, are drastically curtailed...
...The Two Wars of General Pinochet The actual fighting lasted only 24 hours, but General Pinochet has yet to lay down his arms...
...In 1979, with the publication of a "Presidential Directive on Education," the regime moved to "modernize" primary and secondary education...
...Excessive politicization" made possible the rise of Salvador Allende, argued a government adviser who helped draft the 1980 constitution...
...Meanwhile, state support of university education will be cut by 50% between 1980 and 1985.42 The regime, however, continues to exercise full control over what is taught in the university...
...George Orwell's Chile In his classic novel, 1984, George Orwell wrote of a people fully dominated, regimented and indoctrinated by an omnipresent state...
...But it did have three mottos: WAR IS PEACE FREEDOM IS SLAVERY IGNORANCE IS STRENGTH These slogans, which seemed so absurd that one could only read Orwell as exaggerated fiction, now appear all too real...
...Before the economy could be constructed along new lines, it had to be dismantled...
...2 1 Eight years later, the "piranhas" had split into two groups which controlled 195 companies worth an estimated $4.3 billion...
...Once a symbol of radical change within a non-violent framework, Chile has become synonymous with torture and dictatorship, a monument to the limits of change allowed by those who hold economic and political power...
...By mid-1976, thanks to the emergence of a human rights lobby in Congress, Chile's major source of outside funds, U.S...
...In a quiet, angry voice, he condemned the traitors in the military and promised his supporters that, one day, they would again walk down the "broad avenues," they would again control their own destiny...
...All parties which belonged to the Popular Unity (UP) coalition and the left-wing Movement of the Revolutionary Left (MIR) were outlawed, and the other political parties placed in recess...
...Sixty-eight percent of the voters approved it...
...When it was over, the present had become the past, and we all feared for the future...
...Faced with the abrupt demolition of tariff walls, a lack of state credits and investment funds and a severely reduced internal market, important sectors of Chilean industry have simply collapsed...
...Regardless of how the military or any future government resolves the immediate economic crisis, one point is clear: the last 10 years have witnessed important and long-lasting changes in Chile's economy...
...Carty and LAWG, "Miracle or Mirage...
...Always two rockets each, always two planes...
...p. 39...
...81-117...
...2 2 The groups were the beneficiaries of the junta's decision to sell off most state companies at highly undervalued prices, an unparalleled access to relatively low-cost foreign credit, and a striking overlap between their top managers and the government's top ministers...
...Yet no dark premonitions deterred the international banks who, at the height of the international oil crisis, found themselves with billions of dollars on deposit which they had to invest...
...8. See Center for International Policy, Human Rights and the U.S...
...He has waged two wars against the Chilean people...
...On a purely quantitative level, the regime's spending on education in 1980 was still below 1971-72 levels on a per capita basis...
...Friedman's views are best presented in Capitalism and Freedom (Chicago: University of Chicago Press, 1962...
...To cite just one example, congress can vote to reduce expenditures as presented in the president's budget, it cannot raise them, nor can it impose taxes or raise revenues...
...Facing: Funeral of Pablo Neruda, September 1973.NACLA Report Ten years have passed since that day...
...17-18...
...Torture can be stopped in a day, but how long will it take to heal an eightyear-old who has seen his father murdered and his mother disappear...
...Air Force General Gustavo Leigh, with links to the Christian Democrats and his own populist base, was forced to resign from the junta in July 1978...
...6 By 1974, wages were down to 65% of their 1970, pre-Allende level...
...They were certain that this international largess reflected a confidence in what they were doing...
...By driving down wages and letting prices soar, by 1975 the average income of the poorest sectors in Chile (those earning what is called the "Minimum Family Income") had dropped to only 46% of the September 1973 level...
...132 (Santiago: FLACSO, 1981), pp...
...Cited in W. Fortin and C. Medina, The Institutionalization of Repression (Rotterdam, Holland: Institute for the New Chile, 1979), p. 5. 36...
...By brutally crushing the opposition, skillfully manipulating competitors and forcefully asserting his control over all layers of society, Pinochet has shown that he isn't quite the dolt everyone thought him to be...
...Their message: war is not peace, freedom is not slavery, ignorance is not strength...
...In some cases, notably the textile industry, such policies Christian Left graffiti, Valparaiso, 1982.NACLA Repot preserved archaic, highly inefficient firms...
...The government is legally required only to pay a minimum pension to these workers, and only when they reach retirement age...
...By the end of 1970, the BHC group controlled 42 companies and a mutual fund, together worth an estimated $426 million...
...Cited in Jos6 Joaquin Brunner, Sociologia de los principios educativos: Un andlisis de dos reformas de los planesy programas de la ensefianza bdsica chilena: 19 6 5 y 1980, Documento de Trabajo No...
...Robert Carty and Latin American Working Group (LAWG), "Miracle or Mirage...
...Not unlike President Reagan's program of 12Sept/Oct 1983 Last Popular Unity march, September 4, 1973...
...40 * The state will exercise a rigid control over all curriculum and all books used in the schools, and the delicate task of training teachers is reserved exclusively for the conservative Catholic University...
...Gross fixed investment in Chile averaged 11.4% between 1975 and 1980, approximately one-half the Latin American average...
...In 1978, Pinochet promised that the military would remain in power until it perceived a "profound change in the mentality of the social body...
...1 (1982), p. 62...
...The Economy of the New Chile First, Chile is rapidly deindustrializing...
...3 With fanatical determination, the junta set about to rewrite Chilean history...
...48-53...
...Guardia, "La deuda externa," p. 13...
...The military would put him on an airplane bound for Argentina, and, after some mopping up operations, the generals would return to the barracks...
...Schools can be refunded, but how long will it take to educate a generation of illiterates...
...and multilateral assistance-as compared to $80 million during Allende's term, nearly half of which went Allende's term, nearly half of which went directly to the military...
...See Article 3, this issue.] Between 1977 and 1982, $14 billion entered Chile as loans from the major international banks-more than $6 million a day...
...2 5 Showered with funds, Chile's economic czars continued to drag the country down the same rigid free market path...
...Only the Catholic University retains this privilege...
...By inducing a sharp recession, the government was able to bring down inflation to 196% and, ironically, siphon wealth from the poor to the rich...
...For 10 years, Chile's military rulers have been preaching them...
...73 (1978...
...traditional agriculture has been so neglected that it will be years before it can meet the country's basic needs...
...Unemployment naturally surged, reaching 22% by 1976 if one includes those on the Minimum Employment Program, a governmentsponsored jobs program which paid a paltry sum for make-work projects...
...As I walked home along Santiago's streets, filled with the smoke of street barricades and lingering tear gas from the day's demonstrations, I would scan the afternoon headlines: "Allende Must Leave...
...If the first war sought to annihilate a government, the second attempted to destroy a way of governing...
...The Rise of the Financial Groups Nobody plays the speculation game as well as Chile's financial groups...
...In 1982 alone, 810 companies declared bankruptcy in a year which again saw the GNP plummet by 14...
...As if to demonstrate his continued loyalty, Pinochet quickly followed the bank liquidations with a declaration that the government would guarantee $4 billion in private sector debts to foreign banks...
...Jaime Osorio U., "Chile: El estado y la economrfa bajo la dictadura militar," in CIDAMO, Informe de Investigacidn, No...
...His rule would be not only undemocratic, but profoundly anti-democratic...
...They would leave behind a moderate-conservative government charged with writing new rules to ensure that a socialist would never again be elected president of Chile...
...According to the presidential directive, secondary or university training should be considered "an exceptional situation," and those who receive it "should earn it with effort, paying for it" as soon as possible...
...Soon I saw the planes...
...Thus, residents of the wealthier neighborhoods would be guaranteed far better schooling than those in poorer neighborhoods...
...5 * Reducing government spending: Government spending was slashed from a 1973 high of $454 million to $190 million in 1976, with social programs bearing the brunt of the cutbacks...
...has actively fostered the growth of the financial groups at the expense of the future security of its own people...
...To ensure the success of one-man rule, he purged, transferred or otherwise eliminated all potential rivals.' General Oscar Bonilla, for example, 5NACLA Report who enjoyed a significant popular following, perished in a mysterious helicopter crash in 1975...
...The constitution also promises to remove "politics" from society and strip the notion of democracy to an unrecognizable, formalistic essence...
...These policies and others already mentioned-sharply restricting the money supply, ending price controls and freezing wages-form the backbone of the new Chilean economic model, recasting Chile's economy and society in ways that may take decades to reverse...
...4. Jeffrey M. Puryear, Higher Education, Development Assistance and Repressive Regimes (New York: Ford Foundation, 1983), p. 7. 5. Hermann Schwember and Jerome Bear, "Free Market, Unfree Thought," Index on Censorship, Vol...
...See alsoJos6 Bengoa, "Transformations agricoles et paysannerie," AmiriqueLatine(Paris), No...
...During the first two years of its rule, the Junta Militar de Gobierno (composed of the heads of the three military branches and the carabineros), sought to pull out the flower and destroy its roots...
...Even as machine gun toting soldiers patrolled the campuses and professor-prosecutors compiled lists of undesirable colleagues, military administrators at the universities proudly reported, "As you can see, everything here is virtually normalized...
...10, no...
...But no local elections will be allowed...
...Not only had the Nixon Administration destabilized the Allende government, but Nixon, and then Ford, provided critically needed economic support to the foundling regime...
...Textbooks where changed to stress the glories of the nation's early, authoritarian leaders...
...Pilar Vergara, Autoritarismo y cambios estructurales en Chile, Documento de Trabajo No...
...1 Congress was dissolved, the constitution suspended and a state of siege declared (which remained in place until March 1978, when a less severe "state of emergency" was declared...
...Andlisis (Santiago), February 1983...
...And still others, including Pinochet and his closest advisers, had a different idea altogether...
...When the transfer of control is fully operational, the AFPs can expect an estimated $2 billion a year: 13% of Chile's entire GNP...
...The GNP dropped over 14% in 1975, industrial production was off by 25% and public investment-which had traditionally accounted for the largest chunk of investment funds in Chile-was slashed by 48...
...Joaquin...
...It confirmed the worst...
...In 1978, a study revealed that Chile's economy was controlled by only 12 groups-conglomerates based on the economic holdings of one or two families who run their operations for the benefit of the entire empire, not any particular company within it...
...4 With machine gun wielding soldiers patrolling the campuses, the military's supporters drew up lists of faculty, students and staff to be discharged or arrested...
...Of the eight affected banks, four had top executives who also served as government ministers...
...The Second War Pinochet's model of political demobilization was consistent with his adoption of a rigidly exclusionary economic model...
...After the coup, the military immediately replaced all university rectors with retired or active-duty officers, and purged 2,000 faculty members (22% of the University of Chile's faculty...
...I ached for the tension of yesterday...
...block-grants for social services, Pinochet began to turn over to the municipalities the financing and administration of education and other essential social services...
...Other lands have been idled by the lack of investment capital and credits for fertilizer and seed...
...And yet I, like many others, had come to believe that Allende would be deposed in a "golpe blando," a "soft coup...
...Below: Congress building, Santiago, 1979-still padlocked...
...As opposed to the 1975-76 recession, however, this current crisis was neither planned nor desired...
...3 6 But it is the quality of the changes which indicates the extent to which the government is working to mold the children of Chile...
...Stallings, Class Conflict, p. 48...
...Although the state owned only 43 industrial firms in 1970, it accounted for nearly half of GNP and 75% of all gross domestic investment in fixed capital...
...The 12 fields are law, architecture, biochemistry, pharmaceutical chemistry, surgery, dental surgery, agronomy, civil engineering, commercial engineering, forestry, veterinary medicine and psychology...
...74-75 (1981), p. 64...
...The shock plan was designed to do just that under the guise of squeezing hyperinflation out of the system...
...and, good Lord, this must be it, tanks and troop carriers bucking the fleeing traffic and heading toward city center...
...For the victims of the junta's abuse, nothing will be able to wash away the stain of this decade...
...Combined with a new " Municipalities Law" passed the same year, the educational reforms were designed to relieve the state of any financial responsibility for the children's education while ensuring it a firm control over the ideological content and hierarchical administration of educational programs...
...From now on, Chilean children will only have a right to a primary-level education, and a very limited one, at that...
...The Chicago Boys predicted the patient would now begin gaining weight...
...AsJaime Guzmin, a leading government adviser, put it, "While elections will decide government tendencies, they will not question the essential way of life in the nation...
...As winter again turns to spring in Chile, the sounds of protest once more are heard throughout a troubled country...
...Centerright Christian Democrats wanted a return to the pre-Allende status quo with one difference: there would be no more Marxists to contend with...
...6 By 1979, government outlays for social welfare remained 10% below 1969 levels.17 * Tearing down tariff walls: Chilean industries have always relied on high tariffs to protect them from international competition...
...These are transformations affecting everything from the size and administration of Chile's provinces to the entire labor code...
...Freedom Is Slavery For 10 years, the military has told the Chilean people that their country had become too politicized for their own good...
...By 1975, Pinochet's vision had triumphed...
...Quoted from Pinochet's "Plan de Chacarillas," cited in Manuel Antonio Garret6n, "De la seguridad nacional a la nueva institucionalidad: Notas sobre la trayectorfa ideol6gica del nuevo estado autoritario," Foro Internacional (Mexico), No...
...Ibid., p. 63...
...5 (October 1981), p. 17...
...Many who feared the chaos of the Allende years saw stability as the greater good...
...By 1976, the mili7 tary government had auctioned off more than 400 firms at well below market value...
...Yet Pinochet can ill afford to alienate the powerful financial groups that now constitute virtually his only source of support outside the Army...
...references THE LESSONS AND LEGACY OF A DARK DECADE 1. A brief description of political parties and organizations in Chile can be found in "Political Formations in Chile, 1970-1983," in this issue...
...By the end of the Allende government, the state controlled 507 industrial and financial firms, from small flour mills to the largest copper mines...
...For a good review of this literature, see Ibid...
...The tension reached out from the headlines, grabbed your stomach and squeezed...
...Figures in constant 1976 dollars...
...government, will leave its ugly imprint on the country for years to come...
...12-13, and Alberto Bastfas, "Previsi6n: La privatizaci6n un afio despuds," Andlisis, July 1982, pp...
...I couldn't see the missiles hit, but seconds later, heard a dull, sickening thud and saw first smoke and then flames rise to announce the end of an experiment...
...It has already had a decade in which to work toward this end...
...Even the initial fury of the coup, the thousands killed, tortured, jailed, exiled and abused, did not satisfy the regime's desire for revenge...
...I rose early on the morning of September 11, and went to the windows to survey the city...
...For Chile, the coincidence was more fortuitous...
...Financial Times, March 9, 1983...
...After all, why put your money in a shoe factory which might earn you 3% if you can invest in a piece of downtown Santiago and see your capital double...
...Unemployment, which hovered at 3% in 1973, reached 9.2% (and would rise to 13.4% in 1975).7 Within a year of the coup, the junta had dramatically redistributed the national income...
...Before the 10Sept/Oct 1983 recession hit with full force in 1981, before the middle classes became fully disillusioned with Pinochet's rule, there was still a hesitant willingness to let Pinochet, the man who made the trains run on time and "rescued" Chile from the brink of chaos, draw a blueprint for the country's political future...
...By 1978, Chile was showing a trade deficit of $426 million...
...Second, as opposed to the corporativist or fascist models, based on politicizing the masses along reactionary, nationalistic lines, Pinochet's rule would be based on political demobilization...
...Nearly all of them had been trained at the University of Chicago, the bastion of free market, monetarist thought in the United States, and home to such luminaries as Milton Friedman and Arnold Harberger...
...But what has been the cost of these last 10 years...
...cruisers stood guard outside the port, part of a joint U.S.Chilean naval exercise, the sailors boarded trucks and drove toward the capital where they were joined by Army, Air Force and carabinero (Chiles's uniformed, militarized police) forces...
...The University of Chile, once a proud (and progressive) nationwide institution with some 80,000 of Chile's 140,000 university students in 1973, has been dismembered...
...Enrollments at the primary school level have declined from 1973 levels, and secondary school enrollments are increasing at less than the population growth at the relevant age level...
...The lands expropriated before 1973 were quickly handed back to their original owners, and the crops produced on these lands changed to reflect the government's new priorities...
...Interview in Hoy, No...
...4 3 Wealthy lawyers spoke of"killing 50,000 people if that is what is needed to achieve tranquility...
...In their view, Chile's policies of the past had protected uncompetitive industries and led to serious distortions in the economy as 6Sept/Oct 1983 a whole...
...7. Statistics based on a study by economists Rend Corthzar and Jorge Marshall of CIEPLAN, in Mensaje, January-February 1981...
...For opposing positions, see, for example, Andre Gunder Frank, Economic Genocide in Chile: Monetarist Theory Versus Humanity (Nottingham, England: Spokesman Books, 1976) and URPE, The Economics of Milton Friedman and the Chilean Junta (New York: URPE, 1977...
...Therefore, the new Chile would seek to "extirpate undue influence from political parties and parliamentarians...
...By 1983, Chile had a foreign debt which topped $18 billion, one of the highest per capita rates of indebtedness in the world...
...3 4 Behavior Modification The constitution presents the military's political model at the broadest level...
...5 Instruction in entire branches of the social sciences was banned...
...the area sown to 14 major food crops in the current 1982-83 season was 30% below historic averages.' 9 The ironies abound...
...Children of five in 1973 are now finishing-or have already finished-their schooling...
...While this has always been a feature of educational delivery in most capitalist societies, the Chilean regime applauds it: "If you want to be educated in Las Condes [a wealthy Santiago neighborhood]," argued a recent education minister, "move to Las Condes and pay your taxes there...
...For a decade, General Augusto Pinochet Ugarte, Allende's last chief of staff of the armed forces, has ruled Chile with an iron fist and a grim scowl...
...6 (Summer 1981), pp...
Vol. 17 • September 1983 • No. 5
