Why Chile Couldn’t Bury Neoliberalism (Juan David Rojas & Geoff Shullenberger, December 19, 2023, Compact)

Chile’s aborted attempt to rewrite its constitution is a cautionary tale for all of those seeking a radical break—whether from the right or from the left—with the “end-of-history” consensus known as neoliberalism.

Until 2019, Chile was regarded as the pinnacle of Latin American development and a testament to the benefits of free-market economics. To be sure, the model erected by Pinochet and the Chicago Boys—the University of Chicago-trained economists tasked with implementing a radical overhaul of the economic order—eventually restored Chile’s macroeconomic stability following the inflationary chaos unleashed under Salvador Allende’s socialist government. This stabilization allowed the country to attract investment and achieve impressive rates of growth. But the reforms also brought about catastrophically high unemployment, which would have been difficult to sustain under democratic rule. Eventually, the resulting discontent led many Chileans to vote against keeping Pinochet in power in the 1988 referendum that ended his rule.

The irony is that the fruits of the Chicago Boys’s neoliberal reforms came mainly under the stewardship of Pinochet’s democratic successors. After two decades of political turmoil and economic pain under Allende and Pinochet, Chile witnessed an economic boom in the 1990s thanks to high commodity prices. Democratically elected presidents also secured trade deals that had previously eluded the pariah dictatorship. GDP growth averaged 7 percent a year, and per capita GDP doubled by 2010—the year Chile became the first South American country to join the OECD.

The biggest problem with neoliberalism is that, singularly, it works. Yopu can’t have a clash of civilizations when there is only one.