What’s the Matter with Chile?
REVIEW ESSAY
The Chile Project:
The Story of the Chicago Boys and the Downfall of Neoliberalism
by Sebastian Edwards
Princeton University Press, 2023, 376 pages
On September 11, 2023, Chile marked the fiftieth anniversary of the bloody military coup that toppled Socialist president Salvador Allende and installed General Augusto Pinochet, who presided over nearly two decades marked by human rights abuses and radical economic reforms, making the country a laboratory for neoliberal policies later embraced across much of the world. Not long ago, it looked as if the anniversary would mark a definitive break with this history. In 2019, a massive wave of protests over inequality led to the convocation of a new constitutional convention that aimed to replace the constitution imposed by Pinochet in 1980. After three decades in which mostly center-left governments had maintained and expanded upon the suite of free market policies introduced during the dictatorship—a model that had helped generate impressively steady economic growth—the electorate swung hard to the left. Radical candidates won most seats in the constitutional assembly, and in 2021, the thirty-five-year-old former student-activist Gabriel Boric easily won the presidential contest.
But even this forceful leftward momentum rapidly veered off course in the months after Boric took office in early 2022. The new draft constitution, written by the Left-dominated assembly, became deeply unpopular when its details—among them, a proliferation of new rights and a declaration of a “plurinational” state that accorded significant autonomy to Chile’s indigenous communities—were made public. When the vote occurred in September, the proposed constitution lost by a devastating margin of 38–62, forcing the election of a new constitutional convention. Matters only got worse for the Left in the subsequent months, as Boric’s popularity plummeted and his new administration flailed. By May 2023, when a vote was held to elect the new convention, voters had pivoted decisively to the Right and gave a plurality of votes to the party of ultraconservative former congressman José Antonio Kast, who had been defeated by Boric in the 2021 presidential contest.
Kast’s rise is as remarkable a development as the election of Boric was two years ago. For two decades after Chile returned to democratic rule in 1990, the Concertación—a center-left coalition dominated by the Christian Democrat and Socialist parties—held a firm grip on the presidency. In 2009, center-right candidate Sebastián Piñera finally ended this streak with a narrow victory. A Harvard-educated former economics professor and CEO, Piñera took pains to distance himself from the Pinochet dictatorship and loudly condemned its human rights violations. Throughout the decades after Pinochet stepped down, it was understood that a right-wing candidate could only win national office by making such declarations. Piñera was reelected to a second term in 2017, which put him in the presidential palace when the 2019 protests kicked off. This helped discredit him and the moderate conservative faction to which he belongs.
Kast, an unapologetic supporter of Pinochet, has defied the long-standing assumption that right-wing candidates must disavow the dictator and his abuses in order to win elections. The resulting irony is that the fate of the new constitution is now in the hands of a man who defended the old one. Moreover, he and his conservative allies will likely attempt to strengthen the very aspects of the older document that enraged the 2019 protesters: its safeguards against any radical transformation of the sort attempted by Allende. That said, early polling suggests the second attempt at a new constitution will also fail to win majority support when voted on. Indeed, the far-right version currently looks set to fail by a margin comparable to the far-left one. Boric has stated that if the new draft is voted down, “the conditions would not be there to carry out a new constitutional process.” In that case, Pinochet’s 1980 constitution would remain in place.
Far from moving beyond its twentieth-century history, then, Chile now seems mired in it more than ever. If anything, it was the 1990s and 2000s, during which a consensus prevailed around a hybrid regime of pro-market and social democratic policies, that represented a break from the conflict-ridden prior era. Now, as in the early 1970s, energy has dissipated from the political center, and a hard Right and hard Left face off, calling upon the symbols of the past, of Pinochet and Allende, to assert their legitimacy. In the years leading up to the 1973 coup, these implacable enemies each seemed to command just-below majority support, leaving politics deadlocked. The likely failure of the second constitutional convention portends a similar predicament. In 1973, what broke the deadlock was the military—which had maintained a commitment to political neutrality up to then—throwing its force behind one side. This is unlikely to recur, but how the impasse will be resolved is unclear.
Chile and the United States
Chile’s past and present crises carry lessons for all democracies, and perhaps especially for the hegemon to the north. There are plenty of reasons not to draw comparisons between Chile and the United States—one is a middle-income peripheral economy with a population under twenty million; the other is a global superpower with a population nearly twenty times that. But they also have a few important things in common. Like most of the republics in the Americas—and unlike most European nations—both Chile and the United States are presidential democracies with separate executive and legislative branches. They are also, in historical terms, the most politically stable instantiations of this system in the world. Chile gained independence in 1810, just after the United States, and remained under civilian rule until 1973—an unparalleled record in Latin America. During that period, it has had three constitutions, the first completed in 1833, the second in 1925, and the one imposed by Pinochet in 1980.
Presidential democracies are often considered prone to instability because both the executive and the legislative branches are invested with a popular mandate. Americans have witnessed the potential implications of this arrangement in recent years when presidents of one party have ended up in prolonged showdowns with congressional majorities of the other party over the federal budget, the debt ceiling, and other matters. The two most catastrophic breakdowns of the political order in Chilean history followed a similar pattern, although in both instances the military finally intervened. In 1891, conflict between President José Manuel Balmaceda and congress escalated into full-blown civil war when the Chilean army sided with Balmaceda and the navy sided with the legislature. The lead-up to the 1973 coup followed the same pattern. It occurred after Allende and the congress proved unable to reach any compromise, at which point the congressional majority all but gave the military the green light to step in.
Chile’s most recent two constitutions resulted from the disruptions of the Balmaceda and Allende eras. The United States has had one or two official constitutions, depending on whether you count the Articles of Confederation. By some accounts, however, the post–Civil War and Progressive Era amendments were equivalent in their effects to replacing the original one, which means if we count the Articles, the 1789 Constitution, and the transformational amendments of the late nineteenth and early twentieth centuries, Chile and the United States have undergone comparable changes to their legal and political order. That said, whereas the most recent Chilean constitution is forty years old, the most recent truly transformational amendments to the U.S. constitution date back a century. The notion of an entirely new constitution, as has lately been attempted in Chile, seems entirely implausible in the United States; even the prospects of passing new amendments look dim for the foreseeable future (the most recent, the twenty-seventh, was ratified in 1992, but was originally drafted along with the original Constitution in 1789).
Paradoxically, just as the U.S. Constitution has come to seem all the more adamantine, demands to change or replace it have become more common in recent years. Even the American Right, long defined by its reverence for the nation’s founding documents, has shown signs of wavering in its faith. As “postliberal” thought has gained traction, a vague sense has emerged that there may be something amiss in the country’s basic Lockean compact. More bluntly and shockingly, former president and current primary frontrunner Donald Trump called for the “termination” of the Constitution in response to the Democrats’ supposed theft of the 2020 election, though he later walked this back. Less visibly, conservative groups have been organizing an effort under the aegis of a never-used provision of Article V, which allows thirty-four out of fifty state legislatures to convene a constitutional convention, with the aim of introducing a balanced budget amendment and shrinking the size of the federal government. The proposed amendments add up to an overturning of much of the existing document.
If anything, however, the turn against the Constitution has been more pronounced among commentators and intellectuals of the Left. Over a decade ago, the influential left-wing magazine Jacobin was proposing to “burn the constitution,” and it has published many subsequent pieces to the same effect. More recently, in the pages of the New Republic, the journalist Osita Nwanevu stated, “the American left should work toward abolishing the Constitution,” and he is now working on a book making the case for a “new founding” at greater length. Calls to radically amend or scrap the Constitution have grown more widespread in liberal and left-wing outlets during the Biden era, as centrist senators like Joe Manchin have frustrated the advance of progressive agenda items and the conservative majority on the Supreme Court has dealt liberals one blow after another.
Last year, left-wing publications pointed to Chile’s drafting of a new constitution as a model for the American Left. In the progressive monthly In These Times, Banav Sen wrote, “We need to shed U.S. arrogance and look outside this country for models, such as the youth-led movement in Chile that has elected a young leftist president and crafted a constitution befitting the twenty-first century.” In Jacobin, Democratic Socialists of America activist Oren Schweitzer argued that “Americans have much to learn from [Chileans’] struggle for building the mass movements we need here in the United States to deliver a more free and democratic society.” Given the similar governmental structures of the two countries—a bicameral legislature, separation of the executive and legislative—there were indeed echoes in Chile of demands long heard on the American Left. For instance, the 2022 convention proposed abolishing the Senate, which—as in the United States—is reviled by progressives as an antidemocratic body.
How, then, did the international Left respond to the resounding failure of Chile’s constitutional referendum? For the most part, it didn’t. Days after the results came in, the academic Camila Vergara took to the pages of the New Left Review with an incoherent screed that blamed a “right-wing disinformation campaign”—since 2016, the go-to explanation for every progressive loss—while simultaneously claiming that Boric and the convention had compromised too much with the Right. Other outlets that had celebrated the new constitution as a model for the world, like Jacobin and In These Times, were mostly silent. After having published over a dozen celebratory articles while the constitutional rewrite was in process, Jacobin waited three months after the vote to publish a postmortem by René Rojas, which rejected Vergara’s “disinformation” claims and instead—more plausibly—presented the constitution’s mélange of identitarian and ecological commitments as a betrayal of the material concerns that drove the 2019 revolt. It is revealing that none of Jacobin’s contributors identified these flaws before the referendum.
The Chicago Boys
The Left, in Chile and abroad, has been blindsided by recent events, as evidenced by its inability to make sense of the failure of the new constitution, much less the rise of Kast. For its part, the surging Chilean Right, which now openly harkens back to the Pinochet era as a political ideal, has little to say about why so much of the public took to the streets in 2019 or why nearly 80 percent rejected the old constitution in the 2020 plebiscite. A more sober and insightful response to these questions comes from the Chilean economist Sebastian Edwards, who teaches at UCLA. His new book, The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism, was written to make sense of the 2019 estallido social and the subsequent ascent of Boric. But he takes the long view, returning to the economic policies of the Allende administration, then documenting in painstaking detail the controversial reforms of the “Chicago Boys”—the University of Chicago–trained economists who devised the neoliberal model imposed under Pinochet—and the modifications of this program after the return of democracy.
Edwards’s central aim is to account for what he calls the “Chile paradox.” “By 2015,” he writes, “Chile was the indisputable economic leader of Latin America.” How is it, then, that the country with “the highest income per capita, the lowest incidence of poverty, and the best overall social indicators” in the region witnessed a massive revolt on material grounds, the leaders of which demanded a total overhaul of the economic system? The answer cannot simply be that other modes of social well-being were sacrificed to the neoliberal ideal of growth at all costs. This was largely true in the period the neoliberal model was initially imposed under Pinochet, but most of the period of sustained growth was overseen by social democratic leaders who were deeply concerned with avoiding this exact pitfall, and governed accordingly. At the same time, given the coalescence of four-fifths of the public around scrapping the constitution, the revolt can’t be dismissed as ideological confusion or a fit of pique. Clearly something was and is deeply amiss in this apparently successful nation; the willingness of voters to support candidates nostalgic for the dictatorship is as conspicuous a symptom of this as was the earlier left-wing revolt.
In various ways, Edwards is uniquely well-positioned to interpret the history he sets out to chart. He is a member of one of the most illustrious old-money families in Chile. His forebears include the publishers of Santiago’s premier newspaper, El Mercurio, and the literary figures Joaquín Edwards Bello and Jorge Edwards. The latter served as Allende’s ambassador to Cuba, even as other members of the family were among those lobbying the U.S. government to assist in Allende’s overthrow. Sebastian, like Jorge, was evidently something of a black sheep in his largely conservative family. As he recounts, he studied economics at the Universidad de Chile, the more left-leaning of the country’s two most prestigious universities, supported the Socialist Party, and even took a job in Allende’s government while still a student. “After the coup d’état,” Edwards recounts, “our school was closed because, according to the military, it was a ‘nest of communist rats.’” He managed to avoid the misfortunes that befell other student activists after the coup—perhaps due to family connections—and transferred to the Universidad Católica, the more conservative of the two major universities. It was a fateful change of scene.
Starting in the 1950s, as Edwards explains, the Católica’s economics department had become the hub of an academic exchange with the University of Chicago. The program got its start from U.S. government efforts to fight the influence of communism abroad by instilling market-friendly views in economists in training. This was the birthplace of the “Chicago Boys.” Talented Católica economics students were given the opportunity to pursue further study at Chicago, the seat of Milton Friedman and Friedrich von Hayek. When Edwards joined the department in 1974, the Chicago Boys hadn’t made their name yet; on the contrary, they had toiled in relative obscurity for two decades, with free market ideals generally unpopular in an intellectual panorama still dominated by other paradigms. This situation in Chile reflected that in much of the world during the three decades after the Second World War, when Keynesianism was mostly uncontested.
Just a year before the coup in Chile, Friedman famously stated: “Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.” Left-wing intellectuals like David Harvey and Naomi Klein have often accounted for the triumph of neoliberalism in the 1970s by quoting Friedman’s words as an illustration of the movement’s playbook—the “shock doctrine,” as Klein called it. They have taken post-coup Chile as ground zero for the approach Friedman seemed to be advocating. In their simplest version, such accounts can take on a Manichaean, conspiratorial quality. Edwards, who through his deep connections to Católica and Chicago is well-acquainted with most of the people involved in Chile’s neoliberal reforms, offers a counterpoint to such narratives. His personal loyalties do not make him reticent to criticize the Chicago Boys’ policies or their complicity with the dictatorship. Nonetheless, he argues that Chile’s neoliberalization was a far more contingent and internally conflicted process than is often understood.
Edwards’s qualified defense of the Chicago Boys begins with his highly critical account of Allende’s economic policies. Defenders of Allende tend to attribute the serious economic woes of his government to external meddling by the United States and internal sabotage by right‑wing elements. Without denying these were factors, Edwards argues that Allende’s policies failed for foreseeable reasons. Initially, the socialist government succeeded in its goal of increasing aggregate demand through government spending—a standard Keynesian aim, pursued in a particularly radical fashion. But the longer-term result was to cause inflation to surge to over 700 percent in the year prior to the coup. “What the Allende government engaged in,” Edwards writes, “decades before it got its name, were policies very similar to those touted by the supporters of Modern Monetary Theory”: in effect, print lots of money and pretend inflation isn’t a thing.
Edwards also offers an inside view of the Allende regime’s haphazard attempts to deal with the fallout through what he calls a “surrealistic system of price controls.” As a nineteen-year-old student, he was recruited to work in the government Directory of Industry and Commerce, which had the power to authorize or refuse requests for price increases from industry. With inflation rendering authorized prices almost instantly outdated, producers had to constantly submit new price requests, which were “promptly denied.” As Edwards remarks, “Any first year student would have predicted the results of this viciously circular process: massive shortages and a thriving black market for all sorts of goods.” The government responded by cracking down harshly on the black market, shutting down stores that failed to comply with official prices and confiscating their goods. These heavy-handed tactics became a drag on the government’s popularity.
It was in response to these mounting problems that some in Allende’s government began developing the secret project known as Cybersyn, which has recently become the subject of considerable scholarly and popular interest. Guided by the English management consultant Stafford Beer, Cybersyn was supposed to use cutting-edge cybernetic theory and the latest technologies—the telex and the computer—to determine the correct prices of every good in the country. The project has become attractive to those on the left today who imagine that new communication technologies might be used to develop a more intelligently managed economy than was viable in earlier socialist projects. But Edwards is dismissive of the oft-floated idea that Cybersyn could have remedied Chile’s deep economic woes if given more time. He recalls a meeting he attended, at which Beer was present, in which the impracticality of the project seemed evident even to the consultant on whose ideas it was based.
In other words, whatever errors the Chicago Boys themselves made once they had the opportunity to reshape Chile’s economy, Edwards is clear that they were right to believe that the path taken by Allende’s government could only lead to disaster. This critique was most fully developed in their 1972 Programa de desarrollo económico (Economic Development Program), a detailed manifesto that came to be called “The Brick.” This document, like the Chicago Boys who drafted it, has gained a somewhat sinister reputation as part of the Friedmanite conspiracy—in effect, a compendium of the ideas that would be “lying around” once a dictatorship was in place. But Edwards points out a good number of the economists involved were centrist Christian Democrats who imagined they were offering advice to a future elected government, and claims that “most of the proposed changes . . . read like a collection of Social Democratic policies.”
To be clear, Edwards isn’t claiming the Chicago Boys didn’t implement far more radical policies once given free rein by Pinochet. The point is more that such an outcome was not guaranteed, even by the outlook of the economists themselves. Some were more doctrinaire Friedman acolytes than others, and Edwards tends to emphasize the greater long-term influence of his own former teacher, Arnold “Al” Harberger, a more pragmatic Chicago economist than Friedman, who cultivated a far deeper relationship with Chile.
Nonetheless, he also portrays Friedman’s visit to the country in 1975, during which he met with Pinochet, as a turning point. The military regime was divided over the advisability of the free market approach. Some of the more reactionary nationalists in the top brass feared it risked eroding national sovereignty. But Friedman prevailed upon Pinochet to give the Chicago Boys a free hand, to the chagrin of, among others, secret service chief Manuel Contreras, who kept tabs on them. In 1976, Contreras oversaw the assassination of Chilean dissident Orlando Letelier in Washington, D.C. The international incident that resulted worsened relations with the United States, which helped weaken Contreras’s influence. This further strengthened the position of the Chicago Boys, whose initiatives he had vehemently opposed.
Edwards divides the Chicago Boys’ influence into two periods. The first phase, leading up to a major currency crisis that occasioned a severe economic contraction in 1982, brought mixed results. The “shock therapy” prescribed by Friedman—which later became a widely used playbook—brought inflation down while predictably creating massive unemployment. Within a few years, growth surged, which led Pinochet and his advisers to double down. It was in this context that the now-disputed 1980 constitution, which set certain pro-market positions in stone, was ratified by plebiscite, although the legitimacy of the vote was highly suspect given the lack of political freedom at the time. But growth brought back the specter of runaway inflation, leading the government to peg the value of the currency to the U.S. dollar, an experiment that failed disastrously.
It was only during the second round of reforms enacted after the 1982 crisis, Edwards argues, that the first signs of the “Chilean miracle” became evident. Although Friedman’s stance on the pegged currency approach was ambivalent, he seemed to have endorsed it in his second visit to the country in 1981, and he and his more doctrinaire followers lost some of their luster in the resulting crisis. At this point, in Edwards’s telling, Harberger’s more pragmatic approach began to prevail. For instance, in the privatizations of state-owned enterprises that took place in the 1980s, in contrast to the earlier round, the government maintained large blocks of shares in industries seen as strategically important and also emphasized selling shares to small investors from the Chilean middle class, rather than letting foreign conglomerates take full control.
Although he attempts to add nuance to the villainous reputation the Chicago Boys have acquired on the left, Edwards leaves no doubt on two points. First, they and their mentors Friedman and Harberger were aware of the human rights abuses taking place under Pinochet. We know this in part because Friedman and Harberger successfully lobbied Pinochet to release left-wing economists who had been imprisoned after the coup. Second, the neoliberal reforms they promoted and oversaw would likely have been impossible to implement under democratic conditions. The shock therapy prescribed by Friedman produced catastrophic levels of unemployment and massive social disruption, and the wealth generated during the boom years under the dictatorship was not widely distributed. Given the increase in poverty and insecurity suffered by large sectors of the population during these years, it is hard to imagine that an elected government implementing such policies would not have been tossed out.
Conversely, Edwards hints, the return to democracy that occurred at the end of the 1980s was probably necessary for the Chicago Boys’ approach to truly bear fruit. This is not only because, with the end of the Cold War, the tolerance of the West for anti-communist dictatorships dramatically waned. It is also because the logic of development that led to the “Chilean miracle” relied heavily on increasing trade with the rest of the world—think of the ubiquity of Chilean agricultural exports, a mainstay of the new economy—and thus on political integration with the democratic West, which is what enabled Chile to enter into many lucrative free trade agreements in the 1990s and early 2000s and to be admitted into the OECD in 2010. In this sense, the generals who were hostile to the Chicago Boys were onto something: in the long run, the model they implemented was incompatible with insular nationalist military rule.
Neoliberal Economics and Democratic Politics
Free market policies may have ultimately made democratization necessary in the specific context of Chile in the late 1980s, but this is by no means always the case, as the oft-cited case of China makes clear. Moreover, the deep relationship between neoliberalism and authoritarianism in Chile is also no historical accident. As many of its critics have insisted, neoliberalism is intrinsically antidemocratic insofar as perhaps the central concern of neoliberal ideologies is with how to insulate the economy from popular democratic demands. In Chile, the constitution of 1980 was an attempt to achieve this in perpetuity, but similar ends have been accomplished in ways that don’t require military coups, the mass murder of political opponents, or rigged referenda.
Over the past several decades, joining organizations like the European Union, signing free trade agreements, and granting greater autonomy to central bankers have all offered elites ways of blocking the pesky democratic process from interfering in business-friendly policies. In this sense, the 2019 revolt in Chile should be compared, on one hand, to the Greek revolt against EU-imposed austerity early in the decade, and on the other, with the Brexit vote a few years later. Although the first of these was led by the left-wing party Syriza (which later capitulated) and the second was spearheaded by a motley array of right-wingers and a handful of heterodox leftists, both amounted to rejections of an economic order in which policy is placed outside democratic control. The demand to replace Chile’s 1980 constitution was informed by the same aim.
Since the 2019 revolt, center-left Chilean politicians have attempted to distance themselves from the neoliberal model they inherited and maintained, arguing that Pinochet’s constitution had hamstrung them. Ricardo Lagos, who between 2000 and 2006 served as Chile’s first Socialist president after Allende, argued in his recent autobiography that although his aim had been to pursue “equitable growth,” his options were limited. Edwards is dismissive of such disavowals. While it is true that the constitution set a high bar for major reforms—in particular, making it difficult to raise taxes on the wealthy—Lagos did succeed in amending the constitution while in office, and in any case he “enthusiastically pushed, endorsed, and passed” some of the policies that later became the targets of left-wing protesters. He enumerates several examples: Lagos expanded the debt-financing of higher education and the privatization of transportation, and eagerly pursued free trade deals throughout his time in office.
Not only that, all of this seemed to be working well enough, until it didn’t. The first rumblings of unrest occurred during the administration of Lagos’s immediate successor in the presidency, fellow Socialist Michelle Bachelet. Beginning in 2006, students began taking to the streets to protest the heavily privatized and for-profit education system, which was established under Pinochet and expanded under democratic rule, as well as transportation fares (both were later flashpoints of the 2019 protests). Nonetheless, there were no signs of an across-the-board revolt against the neoliberal model. On the contrary, Bachelet was succeeded by Sebastián Piñera, the first conservative president since the end of the dictatorship, and then returned to office in 2014, only to be succeeded by Piñera again. (Presidents cannot serve consecutive terms in Chile.)
Edwards clearly admires many aspects of the Chilean model, but he also takes the protesters’ grievances seriously and highlights several deep flaws that became evident over time. The first and perhaps most egregious concerns Chile’s privatized pension system, which became a model for pro-market policymakers elsewhere; for instance, the George W. Bush administration cited the Chilean example in its aborted attempt to overhaul Social Security in 2006. The conversion of the public pension system into individual retirement accounts was perhaps the crown jewel of the Chicago Boys’ suite of reforms, but it failed to live up to expectations. By the time the first retirees began collecting benefits in the 2000s, they found their incomes were grievously lower than prior to retirement—and lower than what they had been assured by the system’s advocates. Concertación governments made efforts to correct these flaws, but the sense of betrayal was palpable not only among retirees who felt they had been sold a false bill of goods but also among younger people who now had reason to fear they would never be able to retire with dignity.
A similar sense of betrayal attended ballooning student debt. Like other center-left governments in North America and Europe, Chile’s post-dictatorship presidents had emphasized increasing the number of college graduates as a means of upward mobility. This approach had begun during the dictatorship, when private universities began to proliferate, encouraged by government policies. Chile’s leaders had been inspired by Chicago economist Gary Becker’s theory of “human capital,” whereby investing in education and training were treated as equivalent to investments in factory equipment and the like. The expansion of higher education was a success on paper, increasing the number of students in education beyond high school sixfold over three decades.
But the economy failed to offer many of these graduates the jobs they had been promised, and they found themselves driving Ubers or working in retail to pay off large debt loads. The fact that these debts were to private banks that profited from them increased the outrage. According to Edwards, many indebted, underemployed college graduates joined the protests that picked up steam in the early 2010s. In her second term, Bachelet implemented reforms to make higher education free to many students, but for those already saddled with debt, the damage was done and trust was broken, which is one reason so many young people rejected the center-left for the Far Left.
If student debt was as crucial a factor in feeding the 2019 protests as Edwards suggests, that would point to a textbook case of “elite overproduction” feeding political instability, as the historian Peter Turchin has argued. This seems plausible, but Edwards doesn’t consider Turchin’s theory. He does, however, consider a related explanation of the paradox that Chile, despite its success, was overtaken by social turmoil in 2019: perhaps, he suggests, “people recognized progress but believed that things were moving too slowly.” This resembles the notion of a “revolution of rising expectations,” where precisely because things have gotten so much better, people expect further improvements; when these don’t materialize, they revolt. In this case, college graduates facing disappointing prospects would be a microcosm of more broadly felt frustration.
There is some support for this view in the fact that economic growth surged in the 1990s and 2000s but began to plateau in the 2010s, suggesting diminishing returns for the Chilean model. This may be related to young people’s frustrations: while Chile had diversified the economy enough to avoid the commodity-export trap of many Latin American countries, it remained a middle-income country with little growth of high-value-added sectors that would provide jobs to legions of graduates.
Edwards also considers two other possibilities. One is the most likely to appeal to unreconstructed Chicago Boys: that activists and critics of the neoliberal status quo had “convinced people that, in contrast with reality, things had been going south for many years.” Although this argument is likely to be made by conservative defenders of the neoliberal model, it is a variety of Marxist “false consciousness” theory: due to ideological delusions, people failed to recognize the reality around them. But Edwards rightly gives short shrift to this view, concluding it is implausible that such widespread discontent could take hold if it did not bear some relationship to people’s lives.
The explanation he finds most convincing, ultimately, points us beyond the ambit of his own discipline. It may seem bizarre to economists that Chile was “one of the nations where the perception of inequality was the highest” despite the fact that it had done better than most of its peers at reducing inequality, at least as measured in income distribution charts. But inequality, Edwards argues, goes beyond what is easily quantifiable in the Gini coefficient, encompassing “quality of life, social interactions, access to basic services, the nature of interpersonal relations, and the degree of fairness (perceived or real) of the political and economic systems.” He refers to “horizontal inequality,” a “somewhat imprecise concept that many times depends on how people perceive their lives and social interactions with others.” It is in this hazier realm, he concludes, that the malestar (malaise) driving the protests originated.
In other words, it was not any economic failures of neoliberalism but the type of society it created—one characterized by individualism, competition, precarity, and risk-taking—that led to its widespread rejection. Many of the protesters’ demands reflected this: they wanted guaranteed pensions, not the chance to bet their earnings on the stock market for potentially greater reward; they wanted free education, not the opportunity to invest in their own “human capital” in order to reap rewards later. And they wanted these things to be provided to all, equally on the basis of collective solidarity. What they no longer wanted was for all areas of life to be an arena of individual entrepreneurship, as the Chicago Boys’ reforms had sought to make them.
Having acknowledged this, Edwards seems conflicted—unsurprisingly given his background and complicated loyalty to the Chicago Boys and their American mentors. With a certain melancholy, he predicts Chile “will move away from markets and competition [and] veer away from the model put in place by the Chicago Boys and refined by Concertación governments.” As a result, he concludes, the Chilean miracle will be no more, and Chile will return to its pre-1990s position around the middle of Latin American economic performance charts. He completed the book prior to the shocking ascent of Kast earlier this year and the election of the second constitutional convention, which might suggest his prognoses were premature. If Kast and his allies pass their constitution and continue to win elections, perhaps neoliberalism—in a more brutal version than what was pursued by centrist leaders over the past three decades—will have a second lease on life.
It seems more likely that Kast’s far-right positions will ultimately be rejected by an electorate that has shown itself to be painstakingly moderate at most opportunities. The resounding rejection of the left-wing constitution in 2022 was the latest reflection of this moderation. The proposed document betrayed the spirit of the earlier protests, Edwards’s account might suggest: instead of addressing the social fragmentation felt by so many Chileans, it promised to fracture them even further along the lines of fashionable identity politics. The same public that had soured on the Chicago Boys’ doctrines of individual competition as the heart of social life was justifiably skeptical of a constitution that offered up a proliferation of new rights accorded on the basis of group belonging, thereby promising to deepen the country’s divisions. But the majority will also likely be unconvinced by a promised retrenchment of the status quo ante.
The lesson of Chile’s estallido social is that the questions of democracy, legitimacy, and the consent of the governed cannot be brushed aside forever. If one of the key aims of neoliberal rule is to remove the basic operations of the economy from the realm of politics, turning it into an abstract realm to be tinkered with by unelected technocrats, then events in Chile—as in Britain and elsewhere—have demonstrated the long-term unviability of this vision. Regardless of how many years of sustained growth can be pointed to, and regardless of how political structures are designed to insulate economics from politics, the people, once mobilized, still exercise veto power.
In the final speech he delivered just before his death, as the Chilean air force was strafing the presidential palace, Salvador Allende declared: “They have force and will be able to subdue us, but neither force nor crimes can stop social processes.” In the long run, he was right. Where the process will lead now, however, is anyone’s guess.