Marcus Taylor Success for Whom? An Historical-Materialist Critique of Neoliberalism in Chile I. Introduction1 Aftertheproblematicdecadeofthe1990s,thatsaw majorénancialcrisesravagetheeconomiesofEast Asia,MexicoandRussia,Chile hasbecome arare commodityfortheinstitutionscommittedtouphold- ing neoliberalism onaglobal scale.Whilstformer favouriteshavebecometarnishedbycrisis,Chileis stillcelebrated asamodel ofsuccessful neoliberal developmenttobeadmiredandemulatedbyother countriesinLatinAmericaandbeyond.Thisassess- mentisbasedonChile’seconomicperformancein the 1990sthat,asunderlined byEduardoAninat, formerlyChileanMinisterof Finance(1994–9)and nowdeputy managingdirectorof theIMF,wasa periodof vigorousandunprecedented expansion withanaverageannualGDP growthof6.5%.2 Fur- thermore,thesameauthorclaimsthat,despitethe 1 TheauthorwouldliketothankDanielChernilo,SimonClarke,Susanne Soederberg,Alejandro Colás,Adam David Morton,and the HM editorial board forconstructivecriticismofanearlierdraft.Researchforthispaperwasaidedbya grant from the University ofCambridge thatenabled interviews tobecarried out withlabourorganisationsandsocialmovementsinSantiago,June2000.Theauthor acknowledgesthekindhelpofJoseBengoa. 2 Aninat2000,p.2. HistoricalMaterialism,volume10:2(45–75) © KoninklijkeBrillNV,Leiden,2002 Alsoavailableonline–www.brill.nl 46 ï Marcus Taylor recessioncausedbythefalloutfromtheAsiancrisisinthelate1990s,Chile isonceagainsettolead the wayforLatinAmericannationsby resuming healthygrowthinthenewmillennium. Chile hasreceived allthemoreaccoladesfromthemouthpieces of the WashingtonConsensusbecauseitssuccess,asstatedinarecentIMFwork- ingpaper,hasbeenduealmostentirelyto‘goodpolicies’andan‘improved politicalsituation’.3 Firstly,the improved politicalsituationconsistsin the ending ofthePinochetdictatorshipandareturntoelectoraldemocracyin 1990,markedbytheelectionofacoalitionofcentreandcentre-left parties knownasthe‘Concertación’.Thistransitionissuggestedtohave‘reduced theuncertainty aboutthe rules ofthe politicalandeconomicgame’ and therebypermittedmarketforcestoactinamannerundistortedbyworries overfuturepoliticalcomplications.4 Secondly,the‘goodpolicies’celebrated bytheIMFareatenaciousadherencetoneoliberalprinciplesreèectedinthe maintenanceanddeepeningoftheneoliberaleconomicdevelopmentmodel putinplaceunderthePinochetdictatorship(1973–90).Thosestandingbe- hindChile’sdevelopmentstrategyhaveapplaudedthe‘maturebehaviour’ oftheConcertaciónrégime,whichhasexhibitedéscalprudenceratherthan pursuing‘irresponsibleexpansionistpolicyandbeingprisonersofeconomic populism’.5 Insum,theIMFattributestheChileansuccesspreciselytothe abilityofthenewelectedgovernmenttogivefullreigntothefreedomofthe marketandtoshield itfrompossible‘distortions’thatwouldcompromise itsroleastheoptimumresourceallocator. Thisarticleutilisesanhistorical-materialistanalysistoprobebeneaththe surfaceoftheChilean ‘success’ story.An historicalfocusonthe changing relationsbetween state,capitalandlabourallowsadeeper explanationof Chile’seconomicexpansioninthe 1990s,whilstconcurrentlyenabling the articletobroachthe criticalissue of the socialimplicationsofthisformof accumulation.ItisarguedthatChileanneoliberalrestructuring,implemented withinanenvironmentofsystematicrepressionunderthePinochetrégime, wasadesperateandbrutalattempttore-establishtheconditionsforcapital accumulationwithinthe contextof deep crisis.Furthermore,in the1990s, 3 JadresicandZahler2000. 4 JadresicandZahler2000,p.29. 5 Weyland1999,p.65. An Historical-Materialist Critique of Neoliberalism in Chile ï 47 withprecipitousconditionsintheglobalpoliticaleconomyandtheemergence ofanelectedrégimecommittedtoassuringapoliticalandsocialenvironment conducivetocapitalaccumulationbymaintainingtheprofoundsubordina- tionoflabourtocapital,Chileindeedexperiencedaprimary-productexport boom.Thisexportboomunderscored thecelebrated ratesof GDP growth andconstitutestheessenceofthemuch-heraldedChilean‘success’.Neverthe- less,thebasisforthis‘success’ispreciselyaformofsocialrelationscharacter- isedbytheperpetuationofalow-paidandstronglydisciplinedlabourforce. This,inturn,hasgivenrisetoaprofoundlyinequitablesocietymarkedbya dramaticpolarisationofwealth.Inthisrespect,thearticledemonstratespro- foundasymmetriesinherentinChileanneoliberaldevelopmentthatformno partoftheofécialdiscourseofsuccess.Thisisbecausesuchcontradictions areprofoundlyatoddswiththeIMF’sfableofaChileansuccessstoryachieved throughthemediumofuniversallybeneécialfreemarketsabettedbysound governmentalpolicy. II. The crisis of ISI capital accumulation and the emergence of dictatorial domination The originsof Chileanneoliberalismlayinthecrisisof the priorformof capitalistaccumulation,knownasimportsubstitutionindustrialisation(ISI). Thisaccumulationstrategywasbaseduponthepromotionofendogenous industrialdevelopment viaKeynesian-style stateintervention.In orderto nurturedomesticindustrialproduction,thestateengagedinsubsidiestothe industrialsector,manipulationofexchangeratestocheapenmachineryand technologicalimports,andhightariffsonforeignconsumergoods.Alongside industrialproductionfordomesticmarkets,exportofrawmaterialsremained acriticalfeatureofthedevelopmentstrategy.Thesewerenecessaryto generateforeigncurrencyfortheimportoftechnologyandcapitalgoods.ISI initiallyresultedinrelativelyhighgrowthlevelsthroughoutLatinAmerica. Thisinitialsuccess,however,waspredicated upon expandingmarketsfor rawmaterialsexportsowingtoexpansioninthecapitalistcoreandtheexis- tenceofcapitalreservesaccumulatedduringtheexportboomengendered byWorldWarTwo. The ISI modeofaccumulationalsoservedtotransformsocialstructures within LatinAmerica.Byfostering domesticindustry,the stateaided the 48 ï Marcus Taylor growthofadomesticindustrialbourgeoisieandurbanmiddleclass,whilst thetraditionalland-owningoligarchiessufferedaterminaldecline.InChile, industry’sshare of GDP between 1940and1960increasedby onethirdto 22.2%whilstagriculture fell from14.9%to10.1%.6 Moreover,anecessary corollarytotheexpansionoftheindustrialsectorwasthegrowthandconsoli- dationofanurbanworkingclass.Aspeasantslefttheruralsphereforemploy- mentintherapidlyexpandingurbancentres,theemergenceofaproletariat removedfromthetraditionalformsofdominanceexertedinthecountryside constitutedapotentialthreattothedominanceofthebourgeoisie.Organised labourandradicalpoliticalparties–particularlytheCommunistandSocialist parties–weregrowinginsizeand,despiteageneralinabilitytoovercome factionalismatthenationallevel,constitutedanimportantpoliticalforce.7 Emerging fromthese contradictions,anew formofthestatedeveloped alongsidethe ISI accumulationmodel.Contrarytocorporatistmethodsof institutionalisingthelabourmovementseeninotherpartsofLatinAmerica (particularlyArgentinaandMexico),theChileanstatesoughttoregulatethe relations between capitalandlabourviainterventionistmethodsinthe realmofdistribution,such asindexed wages,subsidised basicgoodsand thedevelopmentofamodestwelfaresystem.Throughinterventiontogrant labouragrowing shareof thesocialproduct,thestateattemptedtohar- nesstheworking classestocapitalistdevelopment,checkthegrowthof subversiveideologies,andprovidetheindustrialandsocialcalmnecessary forsustainedaccumulationandtheexpandedreproductionof capitalism. Furthermore,thegrowing purchasing powerof theChileanworking class providedanoutletforthedomesticallyproducedconsumergoods.Assuch, theChilean casecouldbecomparedtoLipietz’sdescriptionof ‘peripheral Fordism’.8 However,unlike thesuggestionsofLipietz’sanalysis,thisform ofthestatedidnotariseinresponsetoconditionsinthecapitalistcorein thelate1960sbuthadclearlybeenindevelopmentsincethecollapseofthe oligarchicstateinthe1930s.Moreover,thedevelopmentoftheinterventionist stateformwasaprocessdrivenbystruggle.Theorganisedlabourmovement inChileretainedsizeableautonomyandideologicalvigourandmadefrequent 6 Fortín1985,p.205. 7 SeeRoddick1989. 8 Lipietz1982. An Historical-Materialist Critique of Neoliberalism in Chile ï 49 demandsupon thestatethatoften necessitatedmaterialorpoliticalcom- promisesinordertochecktheradicalisationofsuchmovements. Theinterventionistformofthestatewasexpandedwiththe‘Revolution inLiberty’ programmedeveloped by the ChristianDemocratgovernment ofEduardoFrei (1964–70).Frei’sstatedintentionwastopursue socially progressivereformwithina‘neocapitalist’modelofdevelopmentthat wouldcombinestateinterventioninkeyindustries(particularlymining)with substantialforeigninvestment.Theprogrammewasbuoyedbyconsiderable USénancingthroughtheAllianceforProgress–aforeignpolicyinitiative intended tostaveoffrevolutioninLatinAmericabypromotingmoderate socialchange.Nevertheless, the ISI modeofdevelopment andcongruent politicalsystemsenteredintocrisisthroughoutLatinAmericaduringthelater 1960sand1970s. TheChileancrisiswasonemomentoftheworld-wideslowingofgrowth inthelate1960sthatturnedintostagnationinthe1970s.Ascountriesemploying ISIstrategieshadremaineddependentonexportingkeyagriculturalandraw materialsinordertogenerateforeignearningsnecessarytoimportindustrial inputsandcapitalgoods,theywerevulnerabletothevicissitudesofworld marketprices.Chile,withitscontinualdependenceoncopperexports,which intheearly1970sconstituted80%ofexportearnings,feltthedownturnin theworldeconomyparticularlysharply.Thisledtogrowingpublicindebted- ness,greaterdependencyonforeigncapitaland,concurrently,greaterpressures toreducesocialspendingandincreaseinvestment.Moreover,owingtothe redistributiveelementoftheChileanISImodel,labourwastakinganincreas- ingportionofthesocialproduct.Inèationwasrisingandbusinessinterests clamouredforacaponwageincreases.Inthesecircumstances,thestatedrew heavilyonforeigncredittoénanceincreasedinvolvementintheeconomy