Chile’s Fight for Socialism and Leaving the Neoliberal Ghost Behind: Part I

By Maxine Adams

Serving since 2018, President Piñera’s government from the eyes of multi-nationals and the right alike, is an economic success story. The “Chilean Miracle” (Undurraga, 2015) as it’s deemed, is an economic success story for corporate capitalists everywhere where socialist futures of meeting human need and democratizing the workplace for public good, is cancelled for a future of profit accumulation, the hoarding of economic power for private interest at the cost of workers, the environment, and democratic governance itself. This current face of capitalism in the Global South, and arguably in the United States and abroad, is one of free market neoliberalism: a counterrevolutionary project, hegemonic in its influence that’s curbed the power of labor from regulations to trade unions to revolutions. In the 1960s and into the 70s, the insurgence of labor power threatened the economic and political power of corporate capitalists, pushing them to unify themselves and conjure a mass assault on worker empowerment and on growing momentum toward alternative economic modalities within the Global South, such as socialism.  

This political project, largely expansive in its economic influence has globalized itself around the world through economic imperialism, setting up transnational conditions for the free market (a market “free” for corporate profit consolidation at the cost of worker empowerment) that homogenizes the economic spheres of the Global South to purport to corporate interest. With neoliberal ideology taking over academic thought (Vazquez & Levin 2018), the economic building blocks of the Chilean free market in academia are well-known: “privatization of the productive apparatus, liberalization of finance and trade, flexibilization of labor and imposition of fiscal rules to control and roll back public spending and social protections” (Portales et al., 2021, p.82). Despite embellished news of the Chilean Miracle from textbooks to newscasters in the present, the Chilean working class has suffered severely from neoliberalism since its implementation, in that neoliberalism has deteriorated labor power – collective worker stability and organizing - that challenges the parasitism of corporate capitalism which has brought Chilean life into a state of precarity and financial destitution 

To give context of neoliberal reforms made to the greater Chilean market system, the Chicago boys, a group of Chilean economic advisors educated at the University of Chicago under Milton Friedman, commenced waves of market reforms through “shock” (direct rather than gradual implementation of fiscal policies). In 1975, after two years of brutal social repression more than 200 state-owned industrial financial and commercial enterprises were sold in the “first wave” of privatization (Undurraga, 2015). Chile’s economic plan “the brick” a master fiscal initiative, diffused neoliberal reforms through policy shocks from 1973 to 1982 (Undurraga, 2015). The brick comprised of two main ideas, first it advocated rebuilding the country by cutting down social expenditure and by opening the economy through liberalizing banks and commerce (Undurraga, 2015). Second it aimed at “modernizing” labor markets, social security, education, health, regionalization, and agriculture: modernization was the decentralization, privatization, free choice, and competition of new economic domains (Undurraga, 2015). 

Chile’s free market model made nominal economic advancements from its inception, with general price stability, low levels of unemployment (though underemployment and informality remained high) and increased per capita income levels (Portales et al., 2021). From the mid-1980s to the end of the 1990s forced to switch to pragmatic neoliberalism (rollback of core neoliberal initiatives), Chile doubled its GDP per capita, later becoming the second Latin American country after Mexico (1994) to be accepted as a member of the Organization for Economic Cooperation and Development (OECD), and in 2014, Chile was classified as a high-income country (Portales et al., 2021). 

However, despite these merits, Chile’s nominal economic achievements fail to provide a comprehensive picture of the neoliberal model. Deep social unrest, along with precaritization of Chilean life, the loss of continuity in work experience where labor is subordinated to a form of flexible exploitation, in the last quarter of Chile in 2019 (Ferretti, 2019; Crimethlnc, 2020) have exposed the weak foundations of the Chilean Miracle. While private pension fund and health insurers have reported record earnings, common Chilean households have experienced long working hours, low pensions, and growing debt (Portales et al., 2021). And at large, eight out of ten Chilean pensioners receive below the national minimum wage (Julián, 2018).  

Precarity, not unique to Chile is a global trend in the flexibilization of the workplace and restructuring of production since the 1970s in accordance with low dismissal costs, prohibition of union activities, and lower minimum wages in countries such as Argentina and Brazil (Julián, 2018; Portales et al., 2021; Undurraga, 2015). Deregulation within Chile resulted in full privatization of pensions in the 1980s along with the institutionalization of informal or unprotected work i.e. the flexibilization of it (Meirosu, 2020). Collapse of strong, collective labor power in Chile through work flexibilization has normalized “low-skilled” work disconnected from a static wage or salary or even set time of payment, where pay is accorded to consumer whims (dependent on the busyness of the workday) with the popularization of the Gig Economy in Chile as a booming contemporary industry (Meirosu, 2020). In conjunction with expansion in low skilled labor, work flexibilization has normalized high-skilled work disconnected from formal employment or even social security coverage, with journalists, university faculty, and other professionals who work as freelancers disconnected from a safety net (Julián, 2018; Lopez et al., 2021). The flexibilization of work has broken down social and political cohesion between workers with a rapid decline in labor connections and union organizing, thus proliferating anxiety and depression among workers. According to a 2021 cross sectional BMC Public Health study, on the Effects of Precarious Work on Symptomatology of Anxiety and Depression in Chilean workers, a 34% increase in anxiety and depression for every unit increase in job insecurity (on the subscale of precarious work) was found among Chilean workers (Lopez et al., 2021). Each subscale had a range from zero to one, the relative risk could be understood as the ration of increase in the anxiety/depression score by workers with no social benefits in comparison with workers with full social benefits (Lopez et al., 2021).With a steady trend in precaritization and 50 years of free market policies, Chile has been accorded with one of the highest rates of mental illness in the world, health reforms have minimally decreased this trend (Lopez et al., 2021). Along with a decline in mental health, on a large economic scale, the free-market model has produced a persistent decline in GDP growth since the 1990s. Firstly, this general decline can be explained by Chile’s economic shift from industrially complex to financially focused, through the privatization of public services (Portales et al., 2021) Secondly, this decline in growth can also be explained through structural economic inequality, indebtedness, and influx of profit relative to wage share (Portales et al., 2021). Thus, this model, which structurally concentrates profit, places Chile towards financial and existential destitution. Chile exhibits one of the highest levels of inequality in the OECD, holding 26th place in income inequality in the world, with a declining growth trend, and raising private debt (Portales et al., 2021). 

In conclusion, the deteriorating conditions of Chilean society largely place a hole in the accomplishments of free market neoliberalism. Employment no longer guarantees stability, protection, and social security. Strong social solidarity is replaced with unregulated markets that obscure grounds for labor power. Policies took the form of wealth extractivism, inducing extreme economic inequalities, rising costs of living, and speculative volatility, all of which have pushed Chileans to precarity. With the government aligned to corporate parasitism along with a violent history of fascism, a burst in revolutionary energy and outcry has surfaced, taking people to the streets in a desire for an alternative future, with Gabriel Borick potentially leading the way.  

 


References 

Chile: Looking back on a year of uprising. (2020, October 15). Crimethlnc. Retrieved September 14, 2022, from https://crimethinc.com/2020/10/15/chile-looking-back-on-a-year-of-uprising-what-makes-revolt-spread-and-what-hinders-it 

Ferretti, P. (2019, October 31). Demanding a life worth living in Chile's "neoliberal paradise." Roar. Retrieved September 14, 2019, from https://roarmag.org/essays/chile-interview-ferretti/ 

Julián, D. (2018). Unions Opposing Labor Precarity in Chile: Union Leaders’ Perceptions and Representations of Collective Action. Latin American Perspectives, 45(1), 63–76. https://doi.org/10.1177/0094582X17737494 

Lopez, G., Kriebel, D., Cifuentes, M. et al. (2021). Effects of precarious work on symptomatology of anxiety and depression in Chilean workers, a cross sectional study. BMC Public Health21, 927. https://doi.org/10.1186/s12889-021-10952-0 

Meirosu, D. (2020). Informality, neoliberalism and the gig economy in Chile. In D. Meirosu (Author), Regulating the platform economy (pp. 62-69). 

Portales, C. B., Negront, N. F., & Caldentey, E. P. (2021). Chile’s Thrust Towards Financial Fragility. Investigación Económica, 80(315), 81–106. https://www.jstor.org/stable/26965504 

Undurraga, T. (2015). Neoliberalism in Argentina and Chile: Common antecedents, divergent paths. Revista De Sociologia E Politica, 11-34. https://doi.org/10.1590/1678-987315235502 

Vazquez, E. M., & Levin, J. S. (n.d.). The tyranny of neoliberalism in the American academic profession. Aaup. Retrieved February 25, 2022, from https://www.aaup.org/article/tyranny-neoliberalism-american-academic-pro... 

 

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