Neo-Liberalism in Chile

Paper Summary:

This paper details the neo-liberal economic reforms that took root in Chile during the dictatorship of Augusto Pinochet, which continue to this day. Chile's experimentation with neo-liberal ideas started in the 1960s when a group of Chileans, who had studied economics in Chicago, who returned to implement what they learned. The writer of this paper details the five cardinal points of neoliberal economics which Pinochet was determined to embrace. The market was to rule supreme, unrestrained by the intervention of government or labor unions. To reduce government interference in the market and reduce government debt, the government withdrew itself from many social welfare programs. This paper analyzes Pinochet as a leader who was able to manipulate institutional changes in his favor, while simultaneously convincing the public that he was acting on their behalf. The writer contends that although democratic principles continue to lag in Chile today, the nation's economic system continues to thrive under a neoliberal, capitalist regime.

From the Paper:

"One might state that need not condone the horrors of the Pinochet regime, to grant that some economic successes did result from his policy, and that the reforms may have been necessary. In concrete policy terms, this change enabled an opening of Chile's economies to the world through free trade. Tariffs were reduced and there was an elimination of state-sponsored subsidies of inefficient businesses, combined with an opening of capital markets, relaxation of restrictive labor laws, a reduction in public employees, privatization of state-owned enterprises and changes in formerly inflexible currency regimes and foreign exchange policies. It is unlikely that such sweeping and foreign domestic reforms could have been accomplished so quickly, and been sustained in the 1990's in the absence of a military regime."

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