The Adjustment Process in Chile: a Comparative Perspective

Abstract

However widespread and forceful its impact, the Latin American debt crisis of the early 1980s was not supposed to happen in Chile. According to the authorities in Santiago, to predominant opinion in the international financial community, and to that of most free market economists, the fundamental long-term changes of economic philosophy and policy adopted after the military coup of September 1973 set Chile apart from the rest of Latin America (with the possible exception of Uruguay). Even post-1976 Argentina, sometimes grouped with Chile on questions of economic philosophy, was in practice less wholehearted and long-term in its commitment to what Foxley (1984) has termed these ‘experiments with neo-conservative economics’. The Chileans started sooner and persisted for longer than the Argentines. They set in place a more solid and permanent set of structures for translating their economic philosophy into practice. Their understanding of, and commitment to, the neo-conservative approach was more thorough. Above all, the Chilean regime was intended to last, to press ahead with irreversible changes, and to overcome internal resistance, to an extent unknown elsewhere in Latin America (except perhaps with very different ends in view in Cuba). General Pinochet and the armed forces had ‘saved’ Chile from Marxism, at least according to the dominant interpretation.