Image 27-12-21 at 8.00 pm 2.jpg

THE CHILEAN QUESTION

Photo: Gabriel Boric, 2014

Credit: David Murphy

DAVID_MURPHEY-15[1].jpg

Melbourne, Australia

26.01.2022

Though once at the vanguard of privatisation, do planned Chilean reforms sound the first death knell for neoliberalism?

 

Gabriel Boric Font was elected last month as President of Chile, in a stand-off with far-right candidate Jose Antonio Kast, with a margin of victory of eleven percent . His extraordinary win comes at a time when reform of the dictatorship-era constitution, already underway, has the potential to transform the Chilean economy. 

 

In 2014, only three weeks into the job, freshman legislator Gabriel Boric gave me an interview at the Congress in the coastal city of Valparaiso. He had come to prominence as a student leader during two years of mass protests across Chile, to highlight unequal access to Chile's privatised higher education system. “I think education is a big deal in Chile nowadays because it’s like the wound from where the inequality bleeds,” said Boric. “We have two different countries, one country for the rich … like, five percent of the population, and a country for the poor. We can not keep on living like that.”

 

The student movement Boric led, had broken through in national elections a month before, producing four new legislators. Boric, alongside Giorgio Jackson, Camila Vallejo and Karol Cariola, were distinguished by their youth. The youngest of the three, Camila Vallejo, was just 25.

 

I had arrived in the capital Santiago two months before, as campaign posters peeled from lamp-posts in the summer sun. As I did vox pops on the street, a student approached me with a poem. She gave a reading in return for a donation, which she would use to fund her education. This was a scene replayed throughout Santiago over the weeks that followed. 

 

Many of the Chileans I interviewed spoke of doubts, as to whether Boric or Vallejo could accomplish what they promised. Despite a reform-minded President-Elect Michelle Bachelet then starting her second term, with a promise of legislation that would meet the demands of the movement that had propelled Boric and Vallejo into power. 

 

“Actually I have the same doubts,” said Boric in 2014.  “The fact that I am here now working in Parliament doesn’t mean that I believe that, here, we can change the world.”

 

Later that year, President Bachelet’s reforms to higher education began with the goal of free higher education for all, but ended with subsidies to just 200,000 students. Challenged in the courts, the attempt “to move from an educational system ruled by commerce to one governed by the state, where education is considered a social right” was never realistic, without constitutional reform.

 

Within six months, the Apruebo Dignidad coalition Boric leads will see Chileans vote on a new constitution, the text of which is under review by a citizens’ convention, elected in 2021. Having met with members of the convention on Monday 20th December, he reiterated his commitment to the convention’s autonomy in comments to the media afterward

 

The 1980 constitution was passed during the dictatorship of General Augusto Pinochet and his military Junta, in a referendum with no electoral roll.  Blank ballots were counted as affirmative to vote, in a poll held on the seventh anniversary of the overthrow of the Unidad Popular government, led by Salvador Allende, in a military coup. 

 

The opening clause of the constitution, “men are born free and equal, in dignity and rights,” reads cynically at first, but worse still for the average Chilean, the document goes on to clarify those rights as a defence of ownership over all classes of property. This included the “rights of private citizens over water”. 

 

To have imagined water, or other natural resources, as privately-owned now seems banal. However, at the time the ‘financialisation’ of this public good was a revolutionary act which turned Chile - then a country of ten million - into a destination for international finance. 

 

When Pinochet and his Junta rewrote the Chilean constitution, they had already spent seven years reshaping the Chilean economy along these lines, using the ideas of Austrian School thinkers such as Friedrich von Hayek, who provided advice personally to the Junta as they redrafted the legal framework of the country. The goal was to insulate Chile’s wealthy from the “levelling” policies of any future socialist government. 

 

Having bombed the palace and caused the death of President Salavador Allende, the Junta worked with its economic advisers trained a decade before at the University of Chicago, in the new economic theories which would come to define the Thatcher and Reagan revolution. The so-called “Chicago boys” occupied advisory positions in governments throughout the region, and had been waiting for a decade to test their ideas.

 

The economic experiment carried out on the Chilean economy would become known as ‘shock therapy’, and would become a familiar story in the U.S., Britain, Poland and the former Soviet Union as well as states borrowing from the International Monetary Fund. The Chilean experiment began with the privatisation of utilities; mining and energy, as well as social infrastructure; health and education. 

 

The Junta went on to sell more than 800 companies taken into national ownership under Allende government. In part, these initiatives produced growth of eight percent annually towards the end of the decade but, by the recession of 1981, this prosperity seemed to melt into the air, having been based on the sale of state assets and international borrowing. Prior to the recession, the rewards from this growth accrued to Chilean asset-holders, a shrinking middle-class and international finance.  

 

Though it went on to perform well during the 1980s, the damage to the Chilean economy had already been done. The shock therapy of the 1970s and the recession which followed led to severe socio-economic damage, in the form of extreme inequality, that reached deep into the lives of children born into poverty for whom access to good quality health and education, and opportunities for housing and employment, were circumscribed by their parents’ wealth. 

 

In an echo of history, Western commentators are already bemoaning the rise of tyranny in the person of Boric, and resurgent left-wing movements across Latin America. The Wall Street Journal offers the view that “Latin America suffers from too much government” and counts amongst its problems, “weak private property rights.”

 

Fearing communism, Kast's defenders  in Chile’s wealthier suburbs were vehement in their opposition to Boric and his coalition. In Lo Barnechea, 12 kilometres northwest of the capital Santiago, residents also rejected the opportunity to redraft Chile’s dictatorship-era constitution. Chile’s wealthy point to the country’s stability, relative to other states in the region.  

 

“I think that it’s a fact that we live better than we did fifty years ago,” said Boric in 2014. “I don’t know if that means Chile is a better country to live in, because the official voices tend to say that we are better because we have more money, but I think that the social fracture here in our country is bigger than it was before.”

 

“The economic revolution that the dictator Pinochet made, in the 1980s, is one of the main reasons for the inequality we have now,” said Boric in 2014. “So I think that we have to change from the root. That is going to take some time, I know that. We don’t have to be anxious about it, but we have to have our goal in mind. We have to change the economics here, because Chile has been a laboratory of neoliberalism in the world.”