THE STATE AND THE MAKING OF CAPITALIST MODERNITY IN CHILE Timothy David Clark A Dissertation Submitted to the Faculty of Graduate Studies in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy Graduate Program in Political Science, York University, Toronto, Ontario October 2013 © Timothy David Clark 2013 ABSTRACT This dissertation provides a reinterpretation of Chilean history via an analysis of the processes of state and class formation in the construction of capitalist modernity. Coventional periodizations divide Chilean history into alternating models of externally-oriented and market- led development, on the one hand, and internally-oriented and state-led development, on the other. What this pendular reading of history overlooks, however, is the question of capitalism as a historically-unique social order: it origins and expansion, how state and class actors respond to the revolutionary pressures emanating from capitalist transformation, and how these responses shape the trajectory of economic development. The first part of this dissertation will contend that the decades from 1870 to 1970 are more fruitfully considered as part of the long and frustrated transition to capitalist hegemony. The second part of this dissertation will examine the decades from 1970 to the present. In a great historical irony, it was the socialist revolution of Allende that made possible the depth of the subsequent capitalist reforms of the military regime by enervating the chief obstacle to capitalist hegemony: Chilean capitalists themselves. And far from initiating a neoliberal ‘withdrawal’ of the state, Pinochet deployed the enormous state power inherited from Allende to carry out a state-led capitalist revolution from above. The military regime actively reconstructed Chilean capitalists as the dominant social force while simultaneously demobilizing organized labour and individualizing and marketizing subjectivities and social reproduction in civil society via the ‘social modernizations’ that comprise the subsidiary state. The particular manner in which capitalist hegemony was instituted in Chile, however, with its powerful capitalist class, institutionally-constrained and subsidiary state, and disarticulated and individualized civil society, has rendered the political system chronically unable to address pressing challenges and now represents the primary obstacle to the deepening ii of socio-economic development. As a result, capitalist modernity in Chile has taken the forms of deep inequalities of power, income, and opportunity and an increasingly stagnant economic structure dependent upon the exploitation of natural resources, on the one hand, and a rigid and exclusionary political system plagued by a series of structural and institutional obstacles to change, on the other. iii ACKNOWLEDGEMENTS The process of researching and writing a dissertation is simultaneously an intensely shared and social experience and an intensely isolated and personal one. The past five years were in many ways a solitary journey, but one that was inevitably enmeshed in the lives of colleagues, friends, and family. From a major earthquake to the birth of my first daughter, there have been many twists and turns in the road, and I would not have arrived at this point without the generosity and support of others. I would like to use this space to recognize these personal debts and apologize for any I may overlook. I begin in Chile, a country that has in many ways become my second home. I would like to thank the staff at the National Archives in Santiago, whose fine accommodations and kind assistance made the archival component of my research a much less laborious task than I expected. As well, I would like to thank the many academics and political figures who generously shared their time, whether for formal interviews or informal conversations over lunch or coffee. Finally, I would like to thank my friends and family in Chile, who always made my visits feel less like work and more like returning home. In particular, I would like to thank Guillermo Tonelli and Gloria Méndez, whose friendship and support over the years has meant more to me than words can express. In Canada, I thank the Canadian International Development Corporation for their financial support of my research. The Graduate Program in Political Science at York University provided a wonderful and stimulating environment. To be surrounded by so many like-minded and critically-minded people was a tremendous source of inspiration and joy. My interest in and connection to Latin America, however, precedes York to Waterloo, where I first met Tanya Korovkin, who took me to Ecuador (though I spoke little to no Spanish) and to whom I will forever be grateful for the experience. Tanya in turn introduced me to Liisa North, who is among iv the finest and most generous mentors and supervisors a student could ask for. Liisa instilled in me an appreciation of the rich literature on economic history and macro-historical sociology in Latin America, and her intellectual influence is evident throughout the historical chapters of this dissertation. Upon my return to York in the PhD program, I found myself one of the many graduate students who were ‘orphaned’ by Liisa’s recent retirement from the university. That vaccum was amply filled, however, by three people. Simone Bohn helped me to appreciate the value of intellectual pluralism and pressed me to engage with the literature on institutions and political parties in Latin America. Hannes Lacher, whose graduate courses were the most intellectually demanding I have experienced, constantly pushed me to my intellectual limits (with admittedly mixed results) and led me to inquire into the historical origins and evolution of capitalism. And my doctoral supervisor, Leo Panitch, who for some reason agreed to take on this curious project on Chile and whose infusion of institutional analysis into a historical-materialist framework served as a methodological guidepost for my own work. Of Leo’s many qualities, the two that make him such a remarkable supervisor are his formidable intellectual range and precision and his generous and gregarious spirit. Leo’s ability to strip-down complex arguments and expose their core weaknesses with a smile and encouragement were often intimidating and humbling, but always inspiring and energizing. Finally, I would like to thank my family, to whom I dedicate this work. To my brother Geoff, who was always there with support whenever my spirits were low or money was tight (which was often on both counts!), despite the continents that divide us. To my father, Roger, who taught me to write, to ask questions, and to search for the answers in history, and whose accomplishment of researching and writing a dissertation as a high-school teacher and father of two young boys I only really came to appreciate these past few years. To my mother, Dianne, v who supported me in almost every conceivable way, without hestitation and unconditionally, and without whom I would have never have finished. And last but not least, to my wife, Andrea, the real reason the topic of this study is Chile, and my daughter, Sofía Isabel. Over these past years, we have all born the burden of this dissertation together. I could not have done it without you, and I would not have wanted to. We did it. vi TABLE OF CONTENTS Abstract…………………………………………………………………………………………ii-iii Acknowledgements………………………………………...…………………………………..iv-vi Table of Contents…………………………………………...…………………………………….vii Abbreviations……………………………………...………………………………………….viii-ix List of Figures and Tables……………………………………...…………………………………..x Introduction: State, Class, and the Transition to Capitalist Modernity in Chile………...……........1 Chapter I: State, Class, and Capitalist Transition…………………………...……………………20 Chapter II: Nitrates and the Origins of the Passive Revolution…………………………………..66 Chapter III: The Limits of the Passive Revolution, 1920-1970…………………………………112 Chapter IV: The Crisis of the State and the Reconstruction of the Capitalist Class…………….191 Chapter V: The Institutionalization of Hegemony and the Return of Democracy……………...277 Conclusion: The State and the Making of Capitalist Modernity in Chile……………………….360 References...……………………………………………………………………………...……...375 Appendix A: List of Interviews…………………………………...………………………….....410 vii ABBREVIATIONS AD Democratic Alliance AFP Pension Management Funds AOAN Workers Assembly on National Nutrition APS Social Property Area AUGE Universal Access With Explicit Guarantees BIH Basic Irrigated Hectares CAP Pacfic Steel Company CERA Agrarian Reform Centres CESEC Centre for Social and Economic Studies CIA Central Intelligence Agency CIF Cost, Insurance, and Freight CIDA Inter-American Committee on Agricultural Development CMPC Paper and Carton Manufacturing Company COAJ Junta Advisory Committee CODELCO National Copper Corporation CONAF National Forestry Corporation COPERE Committee for Economic Programming and Reconstruction CORA Agrarian Reform Corporation CORFO Industrial Promotion Corporation CPC Confederation for Production and Commerce CPPD Alliance of Parties for Democracy CTch Confederation of Chilean Workers CUT Chilean Workers Central DINA National Intelligence Directorate EAP Economically-Active Population ECA Agricultural Marketing Corporation ECLA Economic Commission for Latin America ECLAC Economic Commission for Latin America and the Caribbean ENAP National Petroleum Company ENDESA National Electricity Company viii FOCH Federation of Chilean Workers FONASA