The Re-emergence of Party Politics

Abstract

The political context changed dramatically for the right after 1983. Economic recession, government intransigence, the development of an effective opposition and the growth of social mobilization led to a crisis in the Pinochet regime. Until then, however, political and economic conditions for the government had been favourable. Following the initial economic stabilization and restructuring policies applied until 1978, the Chicago model had sought to perfect an approach which would automatically adjust the economy to domestic and international business cycles. Foreign capital poured into the country, assisted by the liquidity of an international financial system overflowing with petrodollars, and feeding an economic boom.¹ Easy credit allowed entrepreneurs to borrow large sums of money at low interest rates to facilitate programmes of expansion and diversification.It also enabled exporters to neutralize the effects of an increasingly overvalued peso.² The middle sectors could not resist the opportunity to borrow cheap dollars and thereby consume imported goods and services, previously the reserve of the upper classes.