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The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism
How Chile became home to the world’s most radical free-market experiment―and what its downfall suggests about the fate of neoliberalism around the globe
In The Chile Project , Sebastian Edwards tells the remarkable story of how the neoliberal economic model―installed in Chile during the Pinochet dictatorship and deepened during three decades of left-of-center governments―came to an end in 2021, when Gabriel Boric, a young former student activist, was elected president, vowing that “If Chile was the cradle of neoliberalism, it will also be its grave.” More than a story about one Latin American country, The Chile Project is a behind-the-scenes history of the spread and consequences of the free-market thinking that dominated economic policymaking around the world in the second half of the twentieth century―but is now on the retreat.
In 1955, the U.S. State Department launched the “Chile Project” to train Chilean economists at the University of Chicago, home of the libertarian Milton Friedman. After General Augusto Pinochet overthrew socialist president Salvador Allende in 1973, Chile’s “Chicago Boys” implemented the purest neoliberal model in the world for the next seventeen years, undertaking a sweeping package of privatization and deregulation, creating a modern capitalist economy, and sparking talk of a “Chilean miracle.” But under the veneer of success, a profound dissatisfaction with the vast inequalities caused by neoliberalism was growing. In 2019, protests erupted throughout the country, and in 2022 Boric began his presidency with a clear to end neoliberalismo .
In telling the fascinating story of the Chicago Boys and Chile’s free-market revolution, The Chile Project provides an important new perspective on the history of neoliberalism and its global decline today.
In The Chile Project , Sebastian Edwards tells the remarkable story of how the neoliberal economic model―installed in Chile during the Pinochet dictatorship and deepened during three decades of left-of-center governments―came to an end in 2021, when Gabriel Boric, a young former student activist, was elected president, vowing that “If Chile was the cradle of neoliberalism, it will also be its grave.” More than a story about one Latin American country, The Chile Project is a behind-the-scenes history of the spread and consequences of the free-market thinking that dominated economic policymaking around the world in the second half of the twentieth century―but is now on the retreat.
In 1955, the U.S. State Department launched the “Chile Project” to train Chilean economists at the University of Chicago, home of the libertarian Milton Friedman. After General Augusto Pinochet overthrew socialist president Salvador Allende in 1973, Chile’s “Chicago Boys” implemented the purest neoliberal model in the world for the next seventeen years, undertaking a sweeping package of privatization and deregulation, creating a modern capitalist economy, and sparking talk of a “Chilean miracle.” But under the veneer of success, a profound dissatisfaction with the vast inequalities caused by neoliberalism was growing. In 2019, protests erupted throughout the country, and in 2022 Boric began his presidency with a clear to end neoliberalismo .
In telling the fascinating story of the Chicago Boys and Chile’s free-market revolution, The Chile Project provides an important new perspective on the history of neoliberalism and its global decline today.
376 pages, Hardcover
First published May 23, 2023
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Displaying 1 - 30 of 42 reviews
January 3, 2025
To be honest, I was expecting some kind of left-wing drama but instead found a very interesting, well-written, and balanced work. What makes this book great is not only that Sebastian Edwards is a great economist but also that the author has personal ties to Chile and knows the subject from firsthand experience. Highly recommended.
September 20, 2024
A fascinating book, full of paradoxes. For a start, so much in the book questions its title - it argues that the Chicago Boys themselves would not agree with a statement that their policies were neoliberal, that the neoliberal regime has actually collapsed (the book was finished in the early period of the Boric presidency, in the aftermath of the failed referendum) or what neoliberalism actually is. It is written by Sebastian Edwards, a Chilean economist from one of the most established families in Chile, with an MA and PhD from the University of Chicago (and a personal friend of one of the main characters of the book, Arnold “Al” Harberger) - yet not a Chicago boy.
It deals not just with the period of Chilean economic history of the second half of the 20th century but also with the rise of one of the first neoliberal regimes in the world, a precursor to Thatcherism, Reaganism or Washington Consensus. Edwards defines neoliberalism as a “set of beliefs and policy recommendations that emphasise the use of market mechanisms to solve most of society’s problems and needs, including the provision and allocation of social services such as education, old- age pensions, health, support for the arts, and public transportation.” The author traces the intellectual origins of neoliberalism to the ‘Colloquium Lippman’, a meeting of intellectuals in Paris in 1937 that, to a large extent, established the phrase in academic circles, yet not in the ‘market fundamentalist sense’, but rather as a way to denote a departure from the laisses-faire liberalism of the 1930s into something more socially-oriented. Only one strand of the attendees became what we would now call neoliberals, and those were the same people who later established the Mount Pelerin Society after the War.
The narrative is linear and begins with the establishment of cooperation between the Pontificia Universidad Católica de Chile and the University of Chicago in 1956, supported by various foundations and the US State Department as a tool to keep Chile in the US sphere of interest and influence bz building its capitalism. Young economics graduates from Católica went to study in Chicago, where the economics faculty was dominated by proponents of the free market like Arnold “Al” Harberger, George Stigler, Frank Knight and also later Gary Becker. While Milton Friedman is widely believed to have a large influence over the Chicago Boys and he himself has made Chile into a poster boy for his ideology, his influence was limited to a number of steers during his visits, most notably in 1973 (which was notable, as he supported the 'shock therapy' approach against the gradualists).
Edwards experienced Allende's presidency first-hand as a young economist and has a few cool stories, but a relatively orthodox perspective on it - nationalisation paid for by printing money, conntected with mismanagement and general chaos within the economy coincided with fall in copper prices and later led to hyperinflation and a subsequent dramatic decline in living standards in 1972/73. Edwards coined the term 'macroeconomic populism' way back in 1990 to effectivelly describe Allende's economic policies, so it is only natural that even though he is more on the left side of the political spectrum in Chile, he sees the Allende policies as ultimately unsustainable and does not spend too much time discussing economic sabotage by the Nixon presidency. In that sense, the military coup is presented as a predictable and a respected reaction, that was supported by the loss of support for Allende's government in Chilean Congress. It is very interesting to contrast his perspectives with a recent podcast series by Evgeny Morozov, 'Santiago Boys', that deals with Allende's group of technocrats, economists, management specialists and technicians and focuses more on the influence of american technological companies.
A constant theme throughout the book is that more than being sustainably guided by Milton Friedman, the policies of Chicago Boys evolved dynamically from the more practical and technical courses they took in Chicago under Harberger and Knight that they applied onto Chilean situation while they worked in big business-funded think-tanks and as a policy program for Jorge Alessandri campaign against Allende in 1970. It was more about price theory, exchange rate mechanisms and competition, rather than about Friedman’s monetary policy theorems. Harberger himself was, although a member of the Mont Pelerin society, a less ideological and more practical person. This perspective is interesting, but because there is actually little questioning of the individual’s Chicago Boys’ perspectives, it’s hard to fully believe the story of them being almost fully politically neutral technocrats.
The reform policies were put together in 1974, when the writing was on the wall for the Allende presidency, into 'El ladrillo' (literally 'the brick', because of its thickness), a confidential economic plan. While it formed the backbone of the Chicago Boys' policy programme, alot of the later stage policymaking was done more pragmatically, especially by the second wave or second generation of the Chicago Boys, that came into power and prominence in the early 80s. It was less about market fundamentalism and more about ‘subsidiarity’ - limiting the role of the state where it does not need to be and where its role can be replaced by both private sector or non-profit sector.
There were three main phases of reforms - Firstly, between 1973/75 and 1982, a monetarist phase, with the main focus on controlling inflation. In 1979 they began experimenting with a fixed exchange rate, that was overvalued and led to an economic crisis in 1982. After that, policies were more pragmatic and the phase between 1982 to 1990 was more successful, with a stronger focus on human capital (influenced more by Theodore Schultz and Gary Becker). Last phase was under democratic presidencies of Christian-democratic and socialist presidents after the return to democracy, which largely continued in the path charted by Chicago Boys, and it was especially in the 1990s and early 2000s, when the growth in GDP and economic standards in Chile really took off.
The book also later discusses the implementation of reforms in individual policy areas, especially the famous pension reform, led by a young economist Jose Pinera (and a brother of a future president) in 1980. This is one of the most famous of the Chilean reforms, widely replicated around the world, based on changing the standard PAYGO system into one based on individual and individually-owned investment funds. However, as the book also demonstrates, the invidual savers were not able to accumulate savings high enough and the first payouts were only at around 25% of the average wages in the decade before retirement, in contrast with the 70% promised by Pinera and proponents of the reform.
The book dicusses at lenght what the Chicago Boys system actually was, discussing the whole 'neoliberalism' label. While he largely agrees with it - for instance, Edwards repeats a statement by one of the Chicago Boys that effectively, inequality does not matter and in times of economic growth and overall rise in living standards is only a problem of envy. This is contrasted with the rise of general insecurity among middle and lower-income classes in Chile, felt especially in late 2000s and 2010s.
In general, it is a fascinating narrative of an interesting story, how ideas and methods from an academic environment dripped through ambitious young men into political and economic reality of a Latin American country. The book unfortunately does not spend too much space on the interactions between the individual Chicago Boys and although here and there it mentions how relevant were courses the Chicago boys took for their policies (courses that the author took himself as well), it does not deal with the movement as a whole or whether there was a sense of togetherness for the men who shared educational and ideological backgrounds.
I remember being strongly inspired by Chicago Boys the first time I read about them a year before entering university. The idea of a group of Western-educated students from a developing country, coming back home and changing the country for the better through applying novel tools of economics was an idea that inspired my own academic and professional career.
My own politics has changed and developed very significantly since and one of the conclusions of this book was that they were ultimately less ideological, more pragmatic and less successful, than I originally imagined. Pinera’s pension reform is a failure (and I personally support something close to Boric's proposal for collective investment accounts for smaller open countries like Chile), marketisation of education and health did not make much of a difference (an interesting aspect of the education policy was that although all primary and secondary schools were private, universities were not, yet embezzling was enabled through them contracting private entities and shell companies for a lot of their needs), privatisation stopped before selling of true national champions (which is good), inequality persisted and even deepened and much of the economic growth was due to the rise in prices of copper and other natural resources that coincided with an unilateral opening-up of the economy. Not to mention their arrangement and coexistence with the dictatorship regime, which is discussed at lenghts in the book - largely disavowing the Chicago Boys from any responsibility (and initially the director of the secret police DINA, Colonel Manuel Contreras, is presented as the archenemy of the Chicago Boys).
So while a romantic side of me still likes the idea of it, I know better, than to idealise the Chicago Boys and what they actually achieved.
It deals not just with the period of Chilean economic history of the second half of the 20th century but also with the rise of one of the first neoliberal regimes in the world, a precursor to Thatcherism, Reaganism or Washington Consensus. Edwards defines neoliberalism as a “set of beliefs and policy recommendations that emphasise the use of market mechanisms to solve most of society’s problems and needs, including the provision and allocation of social services such as education, old- age pensions, health, support for the arts, and public transportation.” The author traces the intellectual origins of neoliberalism to the ‘Colloquium Lippman’, a meeting of intellectuals in Paris in 1937 that, to a large extent, established the phrase in academic circles, yet not in the ‘market fundamentalist sense’, but rather as a way to denote a departure from the laisses-faire liberalism of the 1930s into something more socially-oriented. Only one strand of the attendees became what we would now call neoliberals, and those were the same people who later established the Mount Pelerin Society after the War.
The narrative is linear and begins with the establishment of cooperation between the Pontificia Universidad Católica de Chile and the University of Chicago in 1956, supported by various foundations and the US State Department as a tool to keep Chile in the US sphere of interest and influence bz building its capitalism. Young economics graduates from Católica went to study in Chicago, where the economics faculty was dominated by proponents of the free market like Arnold “Al” Harberger, George Stigler, Frank Knight and also later Gary Becker. While Milton Friedman is widely believed to have a large influence over the Chicago Boys and he himself has made Chile into a poster boy for his ideology, his influence was limited to a number of steers during his visits, most notably in 1973 (which was notable, as he supported the 'shock therapy' approach against the gradualists).
Edwards experienced Allende's presidency first-hand as a young economist and has a few cool stories, but a relatively orthodox perspective on it - nationalisation paid for by printing money, conntected with mismanagement and general chaos within the economy coincided with fall in copper prices and later led to hyperinflation and a subsequent dramatic decline in living standards in 1972/73. Edwards coined the term 'macroeconomic populism' way back in 1990 to effectivelly describe Allende's economic policies, so it is only natural that even though he is more on the left side of the political spectrum in Chile, he sees the Allende policies as ultimately unsustainable and does not spend too much time discussing economic sabotage by the Nixon presidency. In that sense, the military coup is presented as a predictable and a respected reaction, that was supported by the loss of support for Allende's government in Chilean Congress. It is very interesting to contrast his perspectives with a recent podcast series by Evgeny Morozov, 'Santiago Boys', that deals with Allende's group of technocrats, economists, management specialists and technicians and focuses more on the influence of american technological companies.
A constant theme throughout the book is that more than being sustainably guided by Milton Friedman, the policies of Chicago Boys evolved dynamically from the more practical and technical courses they took in Chicago under Harberger and Knight that they applied onto Chilean situation while they worked in big business-funded think-tanks and as a policy program for Jorge Alessandri campaign against Allende in 1970. It was more about price theory, exchange rate mechanisms and competition, rather than about Friedman’s monetary policy theorems. Harberger himself was, although a member of the Mont Pelerin society, a less ideological and more practical person. This perspective is interesting, but because there is actually little questioning of the individual’s Chicago Boys’ perspectives, it’s hard to fully believe the story of them being almost fully politically neutral technocrats.
The reform policies were put together in 1974, when the writing was on the wall for the Allende presidency, into 'El ladrillo' (literally 'the brick', because of its thickness), a confidential economic plan. While it formed the backbone of the Chicago Boys' policy programme, alot of the later stage policymaking was done more pragmatically, especially by the second wave or second generation of the Chicago Boys, that came into power and prominence in the early 80s. It was less about market fundamentalism and more about ‘subsidiarity’ - limiting the role of the state where it does not need to be and where its role can be replaced by both private sector or non-profit sector.
There were three main phases of reforms - Firstly, between 1973/75 and 1982, a monetarist phase, with the main focus on controlling inflation. In 1979 they began experimenting with a fixed exchange rate, that was overvalued and led to an economic crisis in 1982. After that, policies were more pragmatic and the phase between 1982 to 1990 was more successful, with a stronger focus on human capital (influenced more by Theodore Schultz and Gary Becker). Last phase was under democratic presidencies of Christian-democratic and socialist presidents after the return to democracy, which largely continued in the path charted by Chicago Boys, and it was especially in the 1990s and early 2000s, when the growth in GDP and economic standards in Chile really took off.
The book also later discusses the implementation of reforms in individual policy areas, especially the famous pension reform, led by a young economist Jose Pinera (and a brother of a future president) in 1980. This is one of the most famous of the Chilean reforms, widely replicated around the world, based on changing the standard PAYGO system into one based on individual and individually-owned investment funds. However, as the book also demonstrates, the invidual savers were not able to accumulate savings high enough and the first payouts were only at around 25% of the average wages in the decade before retirement, in contrast with the 70% promised by Pinera and proponents of the reform.
The book dicusses at lenght what the Chicago Boys system actually was, discussing the whole 'neoliberalism' label. While he largely agrees with it - for instance, Edwards repeats a statement by one of the Chicago Boys that effectively, inequality does not matter and in times of economic growth and overall rise in living standards is only a problem of envy. This is contrasted with the rise of general insecurity among middle and lower-income classes in Chile, felt especially in late 2000s and 2010s.
In general, it is a fascinating narrative of an interesting story, how ideas and methods from an academic environment dripped through ambitious young men into political and economic reality of a Latin American country. The book unfortunately does not spend too much space on the interactions between the individual Chicago Boys and although here and there it mentions how relevant were courses the Chicago boys took for their policies (courses that the author took himself as well), it does not deal with the movement as a whole or whether there was a sense of togetherness for the men who shared educational and ideological backgrounds.
I remember being strongly inspired by Chicago Boys the first time I read about them a year before entering university. The idea of a group of Western-educated students from a developing country, coming back home and changing the country for the better through applying novel tools of economics was an idea that inspired my own academic and professional career.
My own politics has changed and developed very significantly since and one of the conclusions of this book was that they were ultimately less ideological, more pragmatic and less successful, than I originally imagined. Pinera’s pension reform is a failure (and I personally support something close to Boric's proposal for collective investment accounts for smaller open countries like Chile), marketisation of education and health did not make much of a difference (an interesting aspect of the education policy was that although all primary and secondary schools were private, universities were not, yet embezzling was enabled through them contracting private entities and shell companies for a lot of their needs), privatisation stopped before selling of true national champions (which is good), inequality persisted and even deepened and much of the economic growth was due to the rise in prices of copper and other natural resources that coincided with an unilateral opening-up of the economy. Not to mention their arrangement and coexistence with the dictatorship regime, which is discussed at lenghts in the book - largely disavowing the Chicago Boys from any responsibility (and initially the director of the secret police DINA, Colonel Manuel Contreras, is presented as the archenemy of the Chicago Boys).
So while a romantic side of me still likes the idea of it, I know better, than to idealise the Chicago Boys and what they actually achieved.
July 16, 2023
I was thinking about to put a five-star rating to this book, because it's so good, but some points, made at the end, make me a bit uncomfortable. It's understandable – the draft was finished in September of 2022, right after the referendum on a new constitution, where the "reject" option received an undiscussed majority of votes.
But even after that Edwards has a negative view of a future of Chile – he studied well the program of a then presidential candidate Gabriel Boric, published in late 2021 and took all the reforms proposed there as a happened fact. The reality showed that when this book was already published almost all the now-President Boric's reform proposals were rejected.
Today, the country is still living in a deep political crisis and economical stagnation – Chile is still there, in a middle income country trap, and sure this crisis will last for some more years. But, as it was mentioned by the same Edwards during the presentation of this book in UDD in June of 2023 – nobody can predict the future.
And now about the book:
For me, as a someone who tries to better understand a country and it's history, especially of the last 50 years, it was a breath of a fresh air to finally read this book. Unfortunately, and it's really hard to believe, but there were no objective book about Chile's current economical "model". Yes, there is one book, El modelo en la encrucijada, but it doesn't provide a deep insides into reforms which took a place in Chile since 1974. Curiously, the introduction of El modelo en la encrucijada was written by the same Edwards.
The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism, originally named as a "Chilean paradox", invites to the journey into the depths of one of the most succeed economic and social transformations of one exact country in the last 50 years. It's an unquestionably must read for any person who wanted to understand the roots of modern Chile, about it's economy and society. It gives an overview of the main reforms, deep analysis of some failed reforms and even something quite important for a discussion about Chile nowadays – what is wrong about the perception if Chile among some parts of a Chilean society.
Must read
But even after that Edwards has a negative view of a future of Chile – he studied well the program of a then presidential candidate Gabriel Boric, published in late 2021 and took all the reforms proposed there as a happened fact. The reality showed that when this book was already published almost all the now-President Boric's reform proposals were rejected.
Today, the country is still living in a deep political crisis and economical stagnation – Chile is still there, in a middle income country trap, and sure this crisis will last for some more years. But, as it was mentioned by the same Edwards during the presentation of this book in UDD in June of 2023 – nobody can predict the future.
And now about the book:
For me, as a someone who tries to better understand a country and it's history, especially of the last 50 years, it was a breath of a fresh air to finally read this book. Unfortunately, and it's really hard to believe, but there were no objective book about Chile's current economical "model". Yes, there is one book, El modelo en la encrucijada, but it doesn't provide a deep insides into reforms which took a place in Chile since 1974. Curiously, the introduction of El modelo en la encrucijada was written by the same Edwards.
The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism, originally named as a "Chilean paradox", invites to the journey into the depths of one of the most succeed economic and social transformations of one exact country in the last 50 years. It's an unquestionably must read for any person who wanted to understand the roots of modern Chile, about it's economy and society. It gives an overview of the main reforms, deep analysis of some failed reforms and even something quite important for a discussion about Chile nowadays – what is wrong about the perception if Chile among some parts of a Chilean society.
Must read
August 3, 2023
Only Sebastian Edwards, with his deep economic knowledge, erudition (I can't recall other economist that could quote Foucault), and deep connections with Chile, could have written this book. It offers a thorough review of how neoliberal ideas won the authoritarian government's mind in Chile, producing the most succesful growth history of Latin American since the 1970s that ended up collapsing on frustrated expectations and failures to extend liberal values to many corners of the society. Perhaps his assesment of the collaborators with a muderous regime is too light, but I understand that this is a price paid for the broad access he had to some key historical characters. An essential reading to understand how Chile ended up in the complicated quagmire it's dealing with now.
March 19, 2024
A class of history, economics and politics.
April 17, 2025
This is a conservative book that aims to rehabilitate the legacy of “the Chicago boys” and try to differentiate them from Pinochet’s regime to the greatest extent possible. I’ve read many leftist books about Allende that idealize UP too much and refuse to see any of its glaring problems. It’s easy to paint Allende as a heroic martyr with deep socialist and democratic convictions.
While some parts of this book are legitimately interesting, and I’m not opposed to conservative perspectives, this author seeks to spend half of the book blaming everything on “the radical left,” “gender politics” “multiculturalism,” and so on. No doubt, Chile is a conservative country, and the U Chicago economists were fairly successful at limiting inflation and creating economic growth. However, many of the arguments of this book were just too much to me. If you are a fan of “The Shock Doctrine” by Naomi Klein, this is an alternative that is better researched. Still, it’s had not to see the CIA-backed coup of Allende as anything besides an act of horrific U.S. imperialism and cynical, anti-democratic Cold War realpolitik. Today, Chile remains deeply divided, with the 2019 estallido social and debate over creating a new constitution. I think Edwards is too dismissive of protestors who he describes as “radical leftists.”
Ultimately, this is not a bad book, but I just had too many issues with it. It is still beneficial to try to understand this viewpoint, and Allende was by no means popular with the Chilean middle and upper classes, which is important to keep in mind.
While some parts of this book are legitimately interesting, and I’m not opposed to conservative perspectives, this author seeks to spend half of the book blaming everything on “the radical left,” “gender politics” “multiculturalism,” and so on. No doubt, Chile is a conservative country, and the U Chicago economists were fairly successful at limiting inflation and creating economic growth. However, many of the arguments of this book were just too much to me. If you are a fan of “The Shock Doctrine” by Naomi Klein, this is an alternative that is better researched. Still, it’s had not to see the CIA-backed coup of Allende as anything besides an act of horrific U.S. imperialism and cynical, anti-democratic Cold War realpolitik. Today, Chile remains deeply divided, with the 2019 estallido social and debate over creating a new constitution. I think Edwards is too dismissive of protestors who he describes as “radical leftists.”
Ultimately, this is not a bad book, but I just had too many issues with it. It is still beneficial to try to understand this viewpoint, and Allende was by no means popular with the Chilean middle and upper classes, which is important to keep in mind.
February 22, 2025
Sebastian Edwards, a Chilean economist who studied at the University of Chicago under Arnold Harberger, provides a detailed blow-by-blow account of Neoliberal (i.e. Free Market) economics in Chile from the 1957, when economists from the University of Chicago partnered with the Pontifical Catholic University of Chile to train professors in Neoliberal economics who might come to influence government policy, through the Pinochet dictatorship from 1973-1990, when "the Chicago Boys" were given almost free rein to implement Neoliberal policies, through the return of democratic government in 1990, when Neoliberal policies continued to dominate policy, to the eventual abandonment of Neoliberalism following a massive popular revolt in 2019.
January 1, 2024
This is probably the best single-volume history of Chilean economic policy from Allende onwards out there. A half-century after Pinochet's coup on September 11th, 1973, his ensuing horrific military dictatorship in Chile is typically only ever referenced in the US in the context of someone vaguely complaining about neoliberalism, that most all-encompassing yet indescribable of modern political typologies. I love pointless definitional debates about what that term "really" means as much as the next guy, but every once in a while it's nice to step back, put the nitpicky logomachia on hold, and reflect on what actually happened: how what had formerly been an unexceptional middle-of-the-road Latin American backwater dodged the twin threats of both a socialist meltdown and brutal authoritarianism to gradually become the richest country in the region. Edwards, who as a 19 year-old college student actually worked in Allende's price control directorate, discusses the economic policy advocated by the "Chicago Boys" of the title, the US-trained and influenced economists primarily responsible for guiding the Chilean economy during the many periods of political turmoil after the coup, surprising me with the well-documented conclusion that neoliberalism actually worked out fairly well for Chile.
I picked up this book because 2023 was the 50th anniversary of the 1973 coup, but by a mysterious coincidence I finished it the day before the much-anticipated death of all-time scumbag Henry Kissinger; surprisingly, and against what I had previously assumed, it turns out that Chile might be one of the few countries in the 20th century whose internal troubles he didn't either cause or make worse. This is important because, as Edwards frankly acknowledges in the very first paragraph, Chilean neoliberalism's chief criticism and "original sin" in the popular imagination is that it was enabled by the dictatorship after the coup. Edwards exonerates Kissinger and the US for Chile's economic difficulties in general, as supposed smoking guns like the "make the economy scream" memo didn't lead to any actual US action; and Allende's overthrow and suicide in particular. While the US might not have liked Allende, and we unquestionably did provide at least some minor support to earlier efforts to prevent his inauguration after he became the first democratically elected Marxist head of government in world history, the coup and his death seem to have been an essentially homegrown affair caused by the his Unidad Popular government's comprehensive economic ineptitude:
"[The Church Committee] concluded that the CIA was involved in an early attempt to keep Allende from becoming president (General Roberto Viaux's 1970 plot). After reviewing thousands of confidential documents and cables, however, the committee determined that there was no evidence supporting the view that the CIA was directly behind the September 11 coup d'état. Even if doubts remain on the extent of the CIA's support to Pinochet and his coconspirators, it is clear that, as Foucault and Rosenstein-Rodan, among others, have noted, Allende's economic policies were a failure."
The book's first section provides a great deal of background context for Pinochet's coup. Even though the book is primarily about post-Allende policy, to understand the Chicago Boys' policies it's important to understand where they were coming from: a collapsing economy with supply shortages, runaway inflation, capital flight, and plummeting real wages, directly caused by the transition to socialism and all of the usual pathologies that you see in the other countries which have tried the same thing. Allende was elected by a tiny plurality in 1970 but tried to govern as if he had a much larger mandate, at first pursuing some seemingly unobjectionable social welfare policies but quickly getting more ambitious and running off the rails, his Vuskovic Plan rapidly causing mass disruption and prompting multiple coup attempts (which, ironically, Pinochet actually helped to foil). Edwards got a fascinating inside view of how poorly the socialist transformation process can be run when he worked in the Allende administration as a teenager doing price controls. It's worth quoting his experience at length:
"One of the most damaging aspects of Unidad Popular's economics program was the surrealistic system of price controls. Maximum prices for over three thousand goods were determined by the Dirección de Industria y Comercio (DIRINCO; Directorate of Industry and Commerce), under the assumption that in every one of those industries there was monopolistic power and companies abused their clients.
I personally know how bad, arbitrary, and harmful the system was, because I was there. As a nineteen-year-old college student at the Universidad de Chile, I was offered the position of assistant to the director of costs and prices at DIRINCO. The unit oversaw every controlled price in the country and had the legal authority to determine whether a price increase was authorized. The position gave me unusual power, as I assigned price adjustment requests to the different accountants who worked in the office, and I kept the director's appointment book. On more than one occasion I was told to misplace a file, or to move it to the top of the pile, or to assign it to a given employee who was sympathetic to one view or another. In 1973, with inflation moving toward the 700 percent mark, prices authorized by the directorate became outdated within a week or so. New requests were immediately submitted, and the directorate promptly denied them. Any first-year student would have predicted the results of this viciously circular process: massive shortages and a thriving black market for all sorts of goods, including such essentials as sugar, rice, coffee, cooking oil, and toilet paper. But the political authorities believed that a strong hand was needed to deal with price gouging promoted by the "enemies of the revolutionary process.""
Edwards wisely doesn't waste much time on the typical bad-faith attempts to claim that this wasn't Real Socialism, or that if it was, its failure was actually all the US or capitalism's fault. He divides post-Allende economic reconstruction into 3 time periods of differing policy regimes as various sets of policymakers (not all of who were influenced by the University of Chicago) rotated in and out under Pinochet and his successor center-left and center-right democratic governments:
- 1973 - 1982: "incipient neoliberalism". Remove price controls, reduce trade barriers, pursue "shock treatment" to fight inflation, deregulate industry, re-privatize inefficient state-owned enterprises.
- 1982 - 1990: "pragmatic neoliberalism". Implement more measured market systems, attract private investment, expand the export sector.
- 1990 - today: "inclusive neoliberalism". Transition to democracy, remove harmful fixed exchange rates, encourage capital inflows, pursue as much free and open trade as possible, deepen now-mature market systems.
While the over pro-market direction is clear, there was more variety under the hood than might be assumed in all of these different policy regimes as Chile became more or less reformist, more or less nationalist, and so on. One crucial element that cannot be ignored is that throughout all of them was a profound concern for the poor: even during the confused early Pinochet years, where the economy was still nearly as bad as it was under Allende, social expenditures were increased, extensive anti-poverty programs were pursued, and public access to health and education was greatly expanded as a top priority. This inarguably left-wing focus is one of the things that make discussing neoliberalism so tortuous: not only were all of the so-called neoliberals completely unaware of the term until many years later, to a man the Chicago Boys all rejected the label and claimed that they were trying to implement a West German-style mixed social market economy. Without adopting a blunt rule like "socialism is when the government does something, and the more the government does the more socialist it is", the distinction between "virtuous socialism" and "perfidious neoliberalism" is so muddled that it's better to just focus on the actual policies themselves.
To that end, Edwards is now a well-regarded economist in his own right, and so thankfully most of the book is devoted to in-depth discussion of Chilean policymaking debates over all three neoliberal phases, with occasional cameos from luminaries like Milton Friedman, Friedrich Hayek, and Al Harberger where relevant. There are long sections on fixed vs flexible vs floating exchange rates, individual accounts vs pay-as-you-go pension reform, the right degree of privatization vs nationalization for various sensitive state owned companies (the military had strong opinions about many public services and key firms, particularly the lucrative cash cow copper giant CODELCO), and how to safely raise taxes up to normal levels in order to develop normal state capacity (Chile still only collected 21% of GDP in taxes in 2022 vs 31% for the average OECD country), with major areas like health, transportation, and education receiving brief but detailed explanations of what the policy goals were and how well they were achieved.
Importantly, the Chicago Boys themselves, who were essentially college students and young economist PhDs from the two major universities in Chile, with a few visiting Americans, seem not to have had any connection at all with Pinochet's horrific human rights abuses, let alone approval or endorsement. It might seem obvious that economic advisors aren't responsible for everything their government does (to use an American analogy, Ben Bernanke would be one of the last guys you'd try to pin George W Bush's Guantanamo Bay crimes on), but you still see people attempt some variant of a "Pinochet did something called neoliberalism, therefore calling something neoliberalism means it's Pinochet" syllogism (never mind that most neoliberalism occurred after he had stepped down) or blame Milton Friedman for the regime's actions even though basically all he did was tell them to stop overvaluing their currency, so it's nice to get the actual story. "Neoliberal" as a leftist political swear term meaning essentially "right-wing" was born from exactly this historical episode, and while I personally would not have implemented all of the specific policies that the Chicago Boys did, on the whole I came away impressed by their achievements and sympathetic to the constraints they were working under. Neoliberalism worked out pretty well for them!
And yet Chileans themselves were not happy with neoliberalism. In the 1980s Chile had roughly the same per capita GDP as Costa Rica and Ecuador at approximately $4,000 USD; 50 years later it had more than sextupled to over $25,000 USD, which was now 40% more than Costa Rica and double that of Ecuador, but discontent was such that the country experienced massive riots in 2019 that led to the election of far-left President Gabriel Boric and several rounds of constitutional reform in order to repudiate neoliberalism, the Chicago Boys, and Pinochet. Edwards discusses the grievances cited by some of the primary protest groups, which are fascinating to an American stepped in intra-left disagreements: while Chileans appreciated the enormous reduction in poverty and creation of general prosperity that neoliberalism had delivered, they were concerned about perceived inequality, as well as more specific issues like student loan debt, toll roads, free trade agreements, and other policies that, though they were enacted by successive left-wing governments, were deemed to have the unacceptable mark of neoliberalism upon them.
Inequality is hard to define and even harder to measure accurately, so Edwards puzzles through why Chileans were so focused on it given that statistics like the Gini coefficient and various OECD indexes gave contemporary Chile relatively good marks on inequality, especially relative to its peers. True, the Chicago Boys had consistently disdained the idea of reducing income inequality for its own sake, but that was done in order to focus on reducing poverty, which they had unquestionably succeeded at to a spectacular degree, propelling the poorest Chileans to a standard of living ever higher than the equivalent deciles in the rest of Latin America. Edwards explores a number of possible hypotheses for this disconnect, including that Chileans were also concerned about less quantifiable concepts like social inequality (referring to "quality of life, social interactions, access to basic services, the nature of interpersonal relations, and the degree of fairness (perceived and real) of the political and economic systems"), which a veteran observer of Occupy Wall Street will find illuminating.
As far as the other grievances are concerned, Edwards points out how curious it was that constitutional reform was demanded as a means to address them, since not only was there was no constitutional barrer whatsoever to, for example, reforming the college funding system or changing how roads were financed to eliminate tolls, but the 1990 Pinochet constitution, though originally adopted under a dictatorship, had been regularly amended over the years without issue. The primary spark for the protests is commonly held to be the October 2019 decision to hike metro fares by 30 pesos ($.04 USD); in a post gilets jaunes/Arab Spring world, we are no longer so surprised that seemingly mundane events can trigger vast cascades of public outrage, but demanding a new constitution in order to save a nickel on a bus pass (or adjust tariff rates, tweak pension funding, etc) seems a bit excessive. It seemed that way to Chileans too, as the eventual anti-neoliberal reform proposal ended up so overburdened by leftist wishlist items (e.g. granting constitutional rights to nature itself) that it was overwhelmingly rejected as this book went to press in September 2022, and in May 2023 a right-wing constitutional convention was elected to write a more conservative draft, which itself was also voted down in December 2023 as of the writing of this review. However much Chileans disliked what they called neoliberalism, they evidently disliked the alternatives even more.
By the way: what is neoliberalism; more relevantly, what did Chileans think it was? Edwards defines it in the Introduction as "a set of beliefs and policy recommendations that emphasize the use of market mechanisms to solve most of society's problems and needs, including the provision and allocation of social services such as education, old-age pensions, health, support for the arts, and public transportation", or more briefly, "neoliberalism is the marketization of almost everything". He supports this with an appendix discussing the Colloque Lippmann and the Mont Pelerin Society, as well as Michel Foucault's approving lectures on neoliberalism and his admiration for Gary Becker, one of the archetypal Chicago economists, including his accusation that the proper blame for the Chilean coup lay on the Marxist ineptitude which had made it necessary. Each country has its own unique spin on even the most seemingly general ideologies, and as mentioned, the primary issue for most Chileans seemed to be a lack of attention to inequality:
"Certainly the fact that neoliberals believe that the market provides the most efficient way of delivering social services does not mean that they ignore social conditions or the plight of the poor... What is true, however, is that for neoliberals the main goal of social policies is reducing (eliminating) poverty through targeted programs rather than reducing inequality. Income distribution - either vertical or horizontal - is not a priority."
This seems like a fair criticism of neoliberalism even if you disagree with it; some people just don't trust the outcomes of market processes (and rightly so, in some cases). The ultimate origins of people's fundamental attitudes towards how markets embody, reflect, or subvert moral values are beyond the scope of this book review (for a good overview of this debate, see Jason Brennan and Peter Jaworski's excellent Markets Without Limits), but as Edwards ably shows, the Chilean experience demonstrates that at least one type of neoliberalism was responsible for a sustained and successful program of eliminating deep poverty, and while marketizing various aspects of society doesn't guarantee success, center-left politicians can safely ignore leftists and right-wingers who attempt to conjure the specter of Pinochet as an excuse to avoid thinking deeply about the lessons to be drawn from what was and is a flawed but quietly triumphant ideology.
Further reading on Chile and related economic subjects:
- A more detailed analysis on the alleged US "invisible blockade", concluding that Chile did just fine destroying its economy on its own, thank you. https://pseudoerasmus.com/2015/05/21/...
- Chile is also often brought up as an example of the "Washington Consensus", which has done much better than its detractors often claim, though of course no single policy is guaranteed to succeed. https://www.sciencedirect.com/science...
- Much more detail on Milton Friedman's two visits to Chile and the fairly mundane economic advice he gave. https://www.cambridge.org/core/journa...
- In light of the Chilean debate on inequality, Auten and Splinter's brand new article "Income Inequality in the United States" shows less income and wealth inequality than is commonly asserted using more accurate calculations. https://www.journals.uchicago.edu/doi...
I picked up this book because 2023 was the 50th anniversary of the 1973 coup, but by a mysterious coincidence I finished it the day before the much-anticipated death of all-time scumbag Henry Kissinger; surprisingly, and against what I had previously assumed, it turns out that Chile might be one of the few countries in the 20th century whose internal troubles he didn't either cause or make worse. This is important because, as Edwards frankly acknowledges in the very first paragraph, Chilean neoliberalism's chief criticism and "original sin" in the popular imagination is that it was enabled by the dictatorship after the coup. Edwards exonerates Kissinger and the US for Chile's economic difficulties in general, as supposed smoking guns like the "make the economy scream" memo didn't lead to any actual US action; and Allende's overthrow and suicide in particular. While the US might not have liked Allende, and we unquestionably did provide at least some minor support to earlier efforts to prevent his inauguration after he became the first democratically elected Marxist head of government in world history, the coup and his death seem to have been an essentially homegrown affair caused by the his Unidad Popular government's comprehensive economic ineptitude:
"[The Church Committee] concluded that the CIA was involved in an early attempt to keep Allende from becoming president (General Roberto Viaux's 1970 plot). After reviewing thousands of confidential documents and cables, however, the committee determined that there was no evidence supporting the view that the CIA was directly behind the September 11 coup d'état. Even if doubts remain on the extent of the CIA's support to Pinochet and his coconspirators, it is clear that, as Foucault and Rosenstein-Rodan, among others, have noted, Allende's economic policies were a failure."
The book's first section provides a great deal of background context for Pinochet's coup. Even though the book is primarily about post-Allende policy, to understand the Chicago Boys' policies it's important to understand where they were coming from: a collapsing economy with supply shortages, runaway inflation, capital flight, and plummeting real wages, directly caused by the transition to socialism and all of the usual pathologies that you see in the other countries which have tried the same thing. Allende was elected by a tiny plurality in 1970 but tried to govern as if he had a much larger mandate, at first pursuing some seemingly unobjectionable social welfare policies but quickly getting more ambitious and running off the rails, his Vuskovic Plan rapidly causing mass disruption and prompting multiple coup attempts (which, ironically, Pinochet actually helped to foil). Edwards got a fascinating inside view of how poorly the socialist transformation process can be run when he worked in the Allende administration as a teenager doing price controls. It's worth quoting his experience at length:
"One of the most damaging aspects of Unidad Popular's economics program was the surrealistic system of price controls. Maximum prices for over three thousand goods were determined by the Dirección de Industria y Comercio (DIRINCO; Directorate of Industry and Commerce), under the assumption that in every one of those industries there was monopolistic power and companies abused their clients.
I personally know how bad, arbitrary, and harmful the system was, because I was there. As a nineteen-year-old college student at the Universidad de Chile, I was offered the position of assistant to the director of costs and prices at DIRINCO. The unit oversaw every controlled price in the country and had the legal authority to determine whether a price increase was authorized. The position gave me unusual power, as I assigned price adjustment requests to the different accountants who worked in the office, and I kept the director's appointment book. On more than one occasion I was told to misplace a file, or to move it to the top of the pile, or to assign it to a given employee who was sympathetic to one view or another. In 1973, with inflation moving toward the 700 percent mark, prices authorized by the directorate became outdated within a week or so. New requests were immediately submitted, and the directorate promptly denied them. Any first-year student would have predicted the results of this viciously circular process: massive shortages and a thriving black market for all sorts of goods, including such essentials as sugar, rice, coffee, cooking oil, and toilet paper. But the political authorities believed that a strong hand was needed to deal with price gouging promoted by the "enemies of the revolutionary process.""
Edwards wisely doesn't waste much time on the typical bad-faith attempts to claim that this wasn't Real Socialism, or that if it was, its failure was actually all the US or capitalism's fault. He divides post-Allende economic reconstruction into 3 time periods of differing policy regimes as various sets of policymakers (not all of who were influenced by the University of Chicago) rotated in and out under Pinochet and his successor center-left and center-right democratic governments:
- 1973 - 1982: "incipient neoliberalism". Remove price controls, reduce trade barriers, pursue "shock treatment" to fight inflation, deregulate industry, re-privatize inefficient state-owned enterprises.
- 1982 - 1990: "pragmatic neoliberalism". Implement more measured market systems, attract private investment, expand the export sector.
- 1990 - today: "inclusive neoliberalism". Transition to democracy, remove harmful fixed exchange rates, encourage capital inflows, pursue as much free and open trade as possible, deepen now-mature market systems.
While the over pro-market direction is clear, there was more variety under the hood than might be assumed in all of these different policy regimes as Chile became more or less reformist, more or less nationalist, and so on. One crucial element that cannot be ignored is that throughout all of them was a profound concern for the poor: even during the confused early Pinochet years, where the economy was still nearly as bad as it was under Allende, social expenditures were increased, extensive anti-poverty programs were pursued, and public access to health and education was greatly expanded as a top priority. This inarguably left-wing focus is one of the things that make discussing neoliberalism so tortuous: not only were all of the so-called neoliberals completely unaware of the term until many years later, to a man the Chicago Boys all rejected the label and claimed that they were trying to implement a West German-style mixed social market economy. Without adopting a blunt rule like "socialism is when the government does something, and the more the government does the more socialist it is", the distinction between "virtuous socialism" and "perfidious neoliberalism" is so muddled that it's better to just focus on the actual policies themselves.
To that end, Edwards is now a well-regarded economist in his own right, and so thankfully most of the book is devoted to in-depth discussion of Chilean policymaking debates over all three neoliberal phases, with occasional cameos from luminaries like Milton Friedman, Friedrich Hayek, and Al Harberger where relevant. There are long sections on fixed vs flexible vs floating exchange rates, individual accounts vs pay-as-you-go pension reform, the right degree of privatization vs nationalization for various sensitive state owned companies (the military had strong opinions about many public services and key firms, particularly the lucrative cash cow copper giant CODELCO), and how to safely raise taxes up to normal levels in order to develop normal state capacity (Chile still only collected 21% of GDP in taxes in 2022 vs 31% for the average OECD country), with major areas like health, transportation, and education receiving brief but detailed explanations of what the policy goals were and how well they were achieved.
Importantly, the Chicago Boys themselves, who were essentially college students and young economist PhDs from the two major universities in Chile, with a few visiting Americans, seem not to have had any connection at all with Pinochet's horrific human rights abuses, let alone approval or endorsement. It might seem obvious that economic advisors aren't responsible for everything their government does (to use an American analogy, Ben Bernanke would be one of the last guys you'd try to pin George W Bush's Guantanamo Bay crimes on), but you still see people attempt some variant of a "Pinochet did something called neoliberalism, therefore calling something neoliberalism means it's Pinochet" syllogism (never mind that most neoliberalism occurred after he had stepped down) or blame Milton Friedman for the regime's actions even though basically all he did was tell them to stop overvaluing their currency, so it's nice to get the actual story. "Neoliberal" as a leftist political swear term meaning essentially "right-wing" was born from exactly this historical episode, and while I personally would not have implemented all of the specific policies that the Chicago Boys did, on the whole I came away impressed by their achievements and sympathetic to the constraints they were working under. Neoliberalism worked out pretty well for them!
And yet Chileans themselves were not happy with neoliberalism. In the 1980s Chile had roughly the same per capita GDP as Costa Rica and Ecuador at approximately $4,000 USD; 50 years later it had more than sextupled to over $25,000 USD, which was now 40% more than Costa Rica and double that of Ecuador, but discontent was such that the country experienced massive riots in 2019 that led to the election of far-left President Gabriel Boric and several rounds of constitutional reform in order to repudiate neoliberalism, the Chicago Boys, and Pinochet. Edwards discusses the grievances cited by some of the primary protest groups, which are fascinating to an American stepped in intra-left disagreements: while Chileans appreciated the enormous reduction in poverty and creation of general prosperity that neoliberalism had delivered, they were concerned about perceived inequality, as well as more specific issues like student loan debt, toll roads, free trade agreements, and other policies that, though they were enacted by successive left-wing governments, were deemed to have the unacceptable mark of neoliberalism upon them.
Inequality is hard to define and even harder to measure accurately, so Edwards puzzles through why Chileans were so focused on it given that statistics like the Gini coefficient and various OECD indexes gave contemporary Chile relatively good marks on inequality, especially relative to its peers. True, the Chicago Boys had consistently disdained the idea of reducing income inequality for its own sake, but that was done in order to focus on reducing poverty, which they had unquestionably succeeded at to a spectacular degree, propelling the poorest Chileans to a standard of living ever higher than the equivalent deciles in the rest of Latin America. Edwards explores a number of possible hypotheses for this disconnect, including that Chileans were also concerned about less quantifiable concepts like social inequality (referring to "quality of life, social interactions, access to basic services, the nature of interpersonal relations, and the degree of fairness (perceived and real) of the political and economic systems"), which a veteran observer of Occupy Wall Street will find illuminating.
As far as the other grievances are concerned, Edwards points out how curious it was that constitutional reform was demanded as a means to address them, since not only was there was no constitutional barrer whatsoever to, for example, reforming the college funding system or changing how roads were financed to eliminate tolls, but the 1990 Pinochet constitution, though originally adopted under a dictatorship, had been regularly amended over the years without issue. The primary spark for the protests is commonly held to be the October 2019 decision to hike metro fares by 30 pesos ($.04 USD); in a post gilets jaunes/Arab Spring world, we are no longer so surprised that seemingly mundane events can trigger vast cascades of public outrage, but demanding a new constitution in order to save a nickel on a bus pass (or adjust tariff rates, tweak pension funding, etc) seems a bit excessive. It seemed that way to Chileans too, as the eventual anti-neoliberal reform proposal ended up so overburdened by leftist wishlist items (e.g. granting constitutional rights to nature itself) that it was overwhelmingly rejected as this book went to press in September 2022, and in May 2023 a right-wing constitutional convention was elected to write a more conservative draft, which itself was also voted down in December 2023 as of the writing of this review. However much Chileans disliked what they called neoliberalism, they evidently disliked the alternatives even more.
By the way: what is neoliberalism; more relevantly, what did Chileans think it was? Edwards defines it in the Introduction as "a set of beliefs and policy recommendations that emphasize the use of market mechanisms to solve most of society's problems and needs, including the provision and allocation of social services such as education, old-age pensions, health, support for the arts, and public transportation", or more briefly, "neoliberalism is the marketization of almost everything". He supports this with an appendix discussing the Colloque Lippmann and the Mont Pelerin Society, as well as Michel Foucault's approving lectures on neoliberalism and his admiration for Gary Becker, one of the archetypal Chicago economists, including his accusation that the proper blame for the Chilean coup lay on the Marxist ineptitude which had made it necessary. Each country has its own unique spin on even the most seemingly general ideologies, and as mentioned, the primary issue for most Chileans seemed to be a lack of attention to inequality:
"Certainly the fact that neoliberals believe that the market provides the most efficient way of delivering social services does not mean that they ignore social conditions or the plight of the poor... What is true, however, is that for neoliberals the main goal of social policies is reducing (eliminating) poverty through targeted programs rather than reducing inequality. Income distribution - either vertical or horizontal - is not a priority."
This seems like a fair criticism of neoliberalism even if you disagree with it; some people just don't trust the outcomes of market processes (and rightly so, in some cases). The ultimate origins of people's fundamental attitudes towards how markets embody, reflect, or subvert moral values are beyond the scope of this book review (for a good overview of this debate, see Jason Brennan and Peter Jaworski's excellent Markets Without Limits), but as Edwards ably shows, the Chilean experience demonstrates that at least one type of neoliberalism was responsible for a sustained and successful program of eliminating deep poverty, and while marketizing various aspects of society doesn't guarantee success, center-left politicians can safely ignore leftists and right-wingers who attempt to conjure the specter of Pinochet as an excuse to avoid thinking deeply about the lessons to be drawn from what was and is a flawed but quietly triumphant ideology.
Further reading on Chile and related economic subjects:
- A more detailed analysis on the alleged US "invisible blockade", concluding that Chile did just fine destroying its economy on its own, thank you. https://pseudoerasmus.com/2015/05/21/...
- Chile is also often brought up as an example of the "Washington Consensus", which has done much better than its detractors often claim, though of course no single policy is guaranteed to succeed. https://www.sciencedirect.com/science...
- Much more detail on Milton Friedman's two visits to Chile and the fairly mundane economic advice he gave. https://www.cambridge.org/core/journa...
- In light of the Chilean debate on inequality, Auten and Splinter's brand new article "Income Inequality in the United States" shows less income and wealth inequality than is commonly asserted using more accurate calculations. https://www.journals.uchicago.edu/doi...
June 16, 2024
tl;dr - the author is trying to distance the Chicago Boys and neoliberalism (radical free market capitalism) from brutal dictator Augusto Pinochet. The book serves to re-write history and leaves out many, many important details from Chile's history to make it look like the "far-left" is still a boogie man.
I've read quite a few books about Chilean history and was looking for different perspectives. I thought this book looked great as it was from the perspective of someone who was not himself a Chicago Boy, but very close to them (turns out even that’s not true and he’s definitely a Chicago Boy pretending to not be one…). I expected to read about Chilean economics from an author that was at least going to attempt to be unbiased and explore why there was a revolt in 2019. That is what the author claims he is going to do in the introduction, but you'll realize pretty early on that the author cannot contain himself - he leaves out very important details that would alter his thesis dramatically and bashes young liberals, even comparing the protests and the protestors to Nazi Germany at one point. It’s rough.
The first glaringly obvious point that the author wrote this book to protect Chicago Boys and neoliberalism is about 20 pages in when the author interviews a former cabinet member of Pinochet’s regime, Juan Fontaine. The author sets up the story by explaining that what us dumb folks that criticize neoliberalism don’t understand is that the economics of the Chicago Boys was not the radical free-market ideology we’re told to believe it was. He explains that the Chicago Boys really didn’t want to privatize EVERYthing, and what neoliberalism really looks like is regulated capitalism with a healthly mix of publicly owned companies. He then explains that Fontaine agreed and told him that in Pinochet’s regime they still had tons of publicly owned sectors/businesses, and gives exactly one example, the copper industry (Codelco is the company) that was and still is publicly owned. He said the Chicago Boys had Codelco “a publicy owned company, [which] contradicts ANY notion of extreme capitalism”.
lmao. bro, 1.) Salvador Allende the socialist was the one who made Codelco public 2.) turns out the Chicago Boys tried to privatize it (which the author does acknowledge later) 3.) Pinochet (and his military) kept it public because Codelco was the military/government’s main source of income and it literally bailed out Pinochet when his economy went to shit. Think about this. Legitimately good socialist policies bailed out Pinochet’s government from the point of no return.. The irony.
But the author makes zero attempt to actually explain this and refute Fontaine’s remark. He doesn’t push back and explain that the Chicago Boys did practice radical capitalism, privatizing everything from healthcare, education, pensions, and.. water?!?! Yes water is privately owned and caused a huge water crisis just a couple years ago.
That’s about when I realized what kind of book this would be, but I kept reading.
# Project Cybersyn
The next glaringly obvious propaganda point was about project cybersyn, Allende and Stafford Beer’s creation of the internet that allowed them to understand and respond to things like economic and logistic issues in the country. Turns out the author was a young guy that worked in Allende’s gov for a hot sec and got to see Stafford Beer talk. He only writes about the project in a couple paragraphs and at the end he says he never heard from Beer again and he gets critical of Beer saying he “wondered if Beer would ever produce the ‘magical’ computer program that could solve every economic program in Chile and prevent the coup from happening”. He gives the sense that the project was a farce and waste of time and that Allende was thinking of nonsense. First of all, Beer did make Cybersyn work. It’s really not that difficult to research. Here are a few links that explain the project:
https://radioambulante.org/audio/la-s...
https://99percentinvisible.org/episod...
https://www.amazon.com/Cybernetic-Rev...
That wasn’t so hard to research was it? But his lack of detail about Cybersyn isn’t what really bothers me. It’s that he doesn’t explain the US’ involvement in Allende’s economy and in the coup at all, both relating to Cybersyn:
1. Cybersyn was actually made and worked. It helped prevent the stalling of goods transportation when there was a trucker protest (where the US spread propaganda against Allende to the truckers)
2. The US had a trade embargo against Chile so the project had zero access to actual computers…. they used Telex machines (typewriters connected to the phone lines) to programmatically send information. The government had exactly one computer
3. During the coup, Pinochet destroyed all the equipment.
The author then explains that the US actually had no involvement in the coup or Allende’s economy, and that Nixon said to “make his economy scream” but that a Senate committee found that the US actually didn’t do anything against Chile. I’m not paraphrasing much, it’s literally one paragraph and the author moves on, seemingly to explain that Allende’s economy was just from bad policy, nothing more. If you read any other books about the coup you will know this is straight up propaganda. here’s why:
In the 2000s the US declassified some but not all the documents regarding Chile/the coup. Peter Kornbluh, a professor at Georgetown University and the US National Archives published a book in conjunction with the US National Archive that summarizes all of the declassified documents. Here’s my very brief summary:
- 1964 CIA distributes 3000 anti communist posters, buys and produces 24 radio news shows and 26 weekly news commentaries ($3 million) to push propaganda against Allende and try to sway the vote to Frei
- The CIA itself credits this propaganda campaign with Frei's election win
- In the same time period, the US gave $91 million to Chile's military even tho they had no internal or external threats (all to get closer to their generals)
- Allende gets elected in 1970 and Nixon directly calls for more propaganda campaigns, funds neo-facist groups in Chile, and plans for different scenarios including using CIA ops to assassinate Allende and commit terrorism in Chile while blaming it on Allende’s government himself
- Nixon imposes harsh economic sanctions on Chile and prevents imports getting into the country
- Nixon and the CIA create a successful campaign to lie about the economy of Chile and convince banks around the world to stop working with them. International companies follow the banks and stop working with Chile (copper mining companies, car companies, etc, stop doing business with Chile).
- US sells their stockpile of copper in order to tank the price of copper (Chile’s biggest export)
- CIA connects and strategizes plans to overthrow Allende’s government with force (with Chile generals and neo-facist group) all while explicitly planning for the world to find out it was conducted by the CIA. They designed the plan but needed Chile to do it so that the US wouldn’t look like the bad guy.
- September 11, 1973 the CIA plan goes into action. Pinochet’s military bombs gov buildings and assumes power
- The US suddenly reverses all the sanctions and economic shocks to Chile’s gov and continues business as usual with Chile
- Chile opens its economy to work with the work (and give a ton of US and foreign companies power)
This and SO SO SO much more.
So, the US literally tanked Chile’s economy by messing the price of copper, getting banks to stop any loans/business with them, implemented a huge propaganda campaign, funds Pinochet, etc. Yet the author of the Chile Project just skips over all of this and says the US did nothing!
There is so much more I want to say about neoliberal policies and how the author is bullshitting his way into justifying terrible policy. When I collect more of my thoughts I’ll put them into a second comment. But I want to address just one more thing, the 2019 protests. The author seems to be so out of touch with reality that he’s basically says the protestors are just cry-babies. He says things like they protested the flaws in the higher education system because “they found out they couldn’t get their dream jobs after graduation” and thus their entitlement is what’s driving the protest. I pulled this reddit comment because I think it does a good job of showing what the protests were really about and how the author is out of touch with reality:
“Answer: Chilean here. The rioting started with a call to evade the payment of the subway - a state owned company - after a panel of experts decided the price had to increase. The price after the hike was set to $830. However, the subway can operate, at a profit, with $600 and the difference is to subsidize the buses of the private concessionaires which are usually derelict machines. The subway was made the core of the public transportation system in 2003 and it has been bad and insufficient since then. As you can imagine, the price hike was only the tip of the iceberg. For the last 15 or 20 years economic growth has been stable, but salaries of the middle and poor have remained constant although indexed to inflation - an index that rarely reflects the actual cost of living of poor people. As an example, avocados which were a staple of Chilean diet since the times of Allende can now be found at lower prices in Europe than in the local farmer's market.
Food prices are related to an ongoing drought. The drought is partially related to global warming, but a lot of water is diverted to plantations and mining and companies don't just grab their allotment: they grab a lot more. This is another source of discontent as water rights are owned by rich privates and landlords.
Since the average salary is low, the resulting pensions are miserable. The pensions system dates back to 1982 and since its inception it has been known that it had to be adapted. A women retiring at 60 will have her pension savings exhausted by the time she is 67, while her life expectation is 79. Guys fare a bit better, but since the average salary here is 600,000 pesos per month (USD 800, heavily skewed to lower numbers than that) then the average pension is lower than minimum wage. Efforts to fix this during the last years have resulted in discussion of the politicians around who is going to manage the money and not about the amount of the pension.
Health coverage is the best if you can afford an expensive insurance plan. State coverage is supposed to cover for everything in the most expensive (economically catastrophic) diseases such as cancer, aids, rare genetic diseases, etc.... but with a small print such as the coverage is for those who get the disease at an age when its improbable you will get it. State health staff and hospitals is insufficient, so people need to arrive at 5am to expect to be seen at some time during the day. Pretty much every administration since the return to the democracy has given more of the cake to big foreign and local investors and has turned a blind eye to company mergers that result in a huge concentration of the market.
There is a general distrust in institutions. A rich banker which evades taxes is sentenced to ethics classes, while a middle-class guy will lose everything, so the courts are not trusted. The carabineros (the police) used to be the last bastion of trust from the populace but it has recently been found that they have been misappropriating millions of dollars from their budget; same with the army. The members of parliament make 32 times the minimum wage - their compensation is higher than most middle-sized companies' CEOs. Yet they just spend time adding 'political gestures' in laws supposed to be for the general good, introducing an artificial noise in the operation of the law. Finally, the executive power here is almighty. Law initiatives start in the president's office to be sent to the congress. So the last 4 administrations (Bachelet 1 and 2, Piñera 1 and 2) have been pushing for laws that were sold to the people as huge social improvements, that in the end were just a matter of redistributing who owned the structures and who managed them. One of the great changes of those administrations is that participation in elections are not compulsory anymore, so a lot of people do not feel represented by anybody so they don't vote instead of attending the booth and writing down their option which is legal. So the representatives elected represent a minority of the minority. So people feel cheated. Discontent has been brewing for decades and now we want these fuckers in power to stop waisting everybody's lives.
Finally, I am sorry but you won't find a single source of unbiased info - especially not in r/chile because there's guys focused on pushing their side of the political agenda there, just like in twitter, facebook and instagram.”
The author makes the protestors sound like animals and Nazis (he compares them to Nazis at one point). His attempt at understanding their actual desires is frustrating but it makes sense when you put it into the perspective that he is a Chicago Boy and is pushing propaganda.
I've read quite a few books about Chilean history and was looking for different perspectives. I thought this book looked great as it was from the perspective of someone who was not himself a Chicago Boy, but very close to them (turns out even that’s not true and he’s definitely a Chicago Boy pretending to not be one…). I expected to read about Chilean economics from an author that was at least going to attempt to be unbiased and explore why there was a revolt in 2019. That is what the author claims he is going to do in the introduction, but you'll realize pretty early on that the author cannot contain himself - he leaves out very important details that would alter his thesis dramatically and bashes young liberals, even comparing the protests and the protestors to Nazi Germany at one point. It’s rough.
The first glaringly obvious point that the author wrote this book to protect Chicago Boys and neoliberalism is about 20 pages in when the author interviews a former cabinet member of Pinochet’s regime, Juan Fontaine. The author sets up the story by explaining that what us dumb folks that criticize neoliberalism don’t understand is that the economics of the Chicago Boys was not the radical free-market ideology we’re told to believe it was. He explains that the Chicago Boys really didn’t want to privatize EVERYthing, and what neoliberalism really looks like is regulated capitalism with a healthly mix of publicly owned companies. He then explains that Fontaine agreed and told him that in Pinochet’s regime they still had tons of publicly owned sectors/businesses, and gives exactly one example, the copper industry (Codelco is the company) that was and still is publicly owned. He said the Chicago Boys had Codelco “a publicy owned company, [which] contradicts ANY notion of extreme capitalism”.
lmao. bro, 1.) Salvador Allende the socialist was the one who made Codelco public 2.) turns out the Chicago Boys tried to privatize it (which the author does acknowledge later) 3.) Pinochet (and his military) kept it public because Codelco was the military/government’s main source of income and it literally bailed out Pinochet when his economy went to shit. Think about this. Legitimately good socialist policies bailed out Pinochet’s government from the point of no return.. The irony.
But the author makes zero attempt to actually explain this and refute Fontaine’s remark. He doesn’t push back and explain that the Chicago Boys did practice radical capitalism, privatizing everything from healthcare, education, pensions, and.. water?!?! Yes water is privately owned and caused a huge water crisis just a couple years ago.
That’s about when I realized what kind of book this would be, but I kept reading.
# Project Cybersyn
The next glaringly obvious propaganda point was about project cybersyn, Allende and Stafford Beer’s creation of the internet that allowed them to understand and respond to things like economic and logistic issues in the country. Turns out the author was a young guy that worked in Allende’s gov for a hot sec and got to see Stafford Beer talk. He only writes about the project in a couple paragraphs and at the end he says he never heard from Beer again and he gets critical of Beer saying he “wondered if Beer would ever produce the ‘magical’ computer program that could solve every economic program in Chile and prevent the coup from happening”. He gives the sense that the project was a farce and waste of time and that Allende was thinking of nonsense. First of all, Beer did make Cybersyn work. It’s really not that difficult to research. Here are a few links that explain the project:
https://radioambulante.org/audio/la-s...
https://99percentinvisible.org/episod...
https://www.amazon.com/Cybernetic-Rev...
That wasn’t so hard to research was it? But his lack of detail about Cybersyn isn’t what really bothers me. It’s that he doesn’t explain the US’ involvement in Allende’s economy and in the coup at all, both relating to Cybersyn:
1. Cybersyn was actually made and worked. It helped prevent the stalling of goods transportation when there was a trucker protest (where the US spread propaganda against Allende to the truckers)
2. The US had a trade embargo against Chile so the project had zero access to actual computers…. they used Telex machines (typewriters connected to the phone lines) to programmatically send information. The government had exactly one computer
3. During the coup, Pinochet destroyed all the equipment.
The author then explains that the US actually had no involvement in the coup or Allende’s economy, and that Nixon said to “make his economy scream” but that a Senate committee found that the US actually didn’t do anything against Chile. I’m not paraphrasing much, it’s literally one paragraph and the author moves on, seemingly to explain that Allende’s economy was just from bad policy, nothing more. If you read any other books about the coup you will know this is straight up propaganda. here’s why:
In the 2000s the US declassified some but not all the documents regarding Chile/the coup. Peter Kornbluh, a professor at Georgetown University and the US National Archives published a book in conjunction with the US National Archive that summarizes all of the declassified documents. Here’s my very brief summary:
- 1964 CIA distributes 3000 anti communist posters, buys and produces 24 radio news shows and 26 weekly news commentaries ($3 million) to push propaganda against Allende and try to sway the vote to Frei
- The CIA itself credits this propaganda campaign with Frei's election win
- In the same time period, the US gave $91 million to Chile's military even tho they had no internal or external threats (all to get closer to their generals)
- Allende gets elected in 1970 and Nixon directly calls for more propaganda campaigns, funds neo-facist groups in Chile, and plans for different scenarios including using CIA ops to assassinate Allende and commit terrorism in Chile while blaming it on Allende’s government himself
- Nixon imposes harsh economic sanctions on Chile and prevents imports getting into the country
- Nixon and the CIA create a successful campaign to lie about the economy of Chile and convince banks around the world to stop working with them. International companies follow the banks and stop working with Chile (copper mining companies, car companies, etc, stop doing business with Chile).
- US sells their stockpile of copper in order to tank the price of copper (Chile’s biggest export)
- CIA connects and strategizes plans to overthrow Allende’s government with force (with Chile generals and neo-facist group) all while explicitly planning for the world to find out it was conducted by the CIA. They designed the plan but needed Chile to do it so that the US wouldn’t look like the bad guy.
- September 11, 1973 the CIA plan goes into action. Pinochet’s military bombs gov buildings and assumes power
- The US suddenly reverses all the sanctions and economic shocks to Chile’s gov and continues business as usual with Chile
- Chile opens its economy to work with the work (and give a ton of US and foreign companies power)
This and SO SO SO much more.
So, the US literally tanked Chile’s economy by messing the price of copper, getting banks to stop any loans/business with them, implemented a huge propaganda campaign, funds Pinochet, etc. Yet the author of the Chile Project just skips over all of this and says the US did nothing!
There is so much more I want to say about neoliberal policies and how the author is bullshitting his way into justifying terrible policy. When I collect more of my thoughts I’ll put them into a second comment. But I want to address just one more thing, the 2019 protests. The author seems to be so out of touch with reality that he’s basically says the protestors are just cry-babies. He says things like they protested the flaws in the higher education system because “they found out they couldn’t get their dream jobs after graduation” and thus their entitlement is what’s driving the protest. I pulled this reddit comment because I think it does a good job of showing what the protests were really about and how the author is out of touch with reality:
“Answer: Chilean here. The rioting started with a call to evade the payment of the subway - a state owned company - after a panel of experts decided the price had to increase. The price after the hike was set to $830. However, the subway can operate, at a profit, with $600 and the difference is to subsidize the buses of the private concessionaires which are usually derelict machines. The subway was made the core of the public transportation system in 2003 and it has been bad and insufficient since then. As you can imagine, the price hike was only the tip of the iceberg. For the last 15 or 20 years economic growth has been stable, but salaries of the middle and poor have remained constant although indexed to inflation - an index that rarely reflects the actual cost of living of poor people. As an example, avocados which were a staple of Chilean diet since the times of Allende can now be found at lower prices in Europe than in the local farmer's market.
Food prices are related to an ongoing drought. The drought is partially related to global warming, but a lot of water is diverted to plantations and mining and companies don't just grab their allotment: they grab a lot more. This is another source of discontent as water rights are owned by rich privates and landlords.
Since the average salary is low, the resulting pensions are miserable. The pensions system dates back to 1982 and since its inception it has been known that it had to be adapted. A women retiring at 60 will have her pension savings exhausted by the time she is 67, while her life expectation is 79. Guys fare a bit better, but since the average salary here is 600,000 pesos per month (USD 800, heavily skewed to lower numbers than that) then the average pension is lower than minimum wage. Efforts to fix this during the last years have resulted in discussion of the politicians around who is going to manage the money and not about the amount of the pension.
Health coverage is the best if you can afford an expensive insurance plan. State coverage is supposed to cover for everything in the most expensive (economically catastrophic) diseases such as cancer, aids, rare genetic diseases, etc.... but with a small print such as the coverage is for those who get the disease at an age when its improbable you will get it. State health staff and hospitals is insufficient, so people need to arrive at 5am to expect to be seen at some time during the day. Pretty much every administration since the return to the democracy has given more of the cake to big foreign and local investors and has turned a blind eye to company mergers that result in a huge concentration of the market.
There is a general distrust in institutions. A rich banker which evades taxes is sentenced to ethics classes, while a middle-class guy will lose everything, so the courts are not trusted. The carabineros (the police) used to be the last bastion of trust from the populace but it has recently been found that they have been misappropriating millions of dollars from their budget; same with the army. The members of parliament make 32 times the minimum wage - their compensation is higher than most middle-sized companies' CEOs. Yet they just spend time adding 'political gestures' in laws supposed to be for the general good, introducing an artificial noise in the operation of the law. Finally, the executive power here is almighty. Law initiatives start in the president's office to be sent to the congress. So the last 4 administrations (Bachelet 1 and 2, Piñera 1 and 2) have been pushing for laws that were sold to the people as huge social improvements, that in the end were just a matter of redistributing who owned the structures and who managed them. One of the great changes of those administrations is that participation in elections are not compulsory anymore, so a lot of people do not feel represented by anybody so they don't vote instead of attending the booth and writing down their option which is legal. So the representatives elected represent a minority of the minority. So people feel cheated. Discontent has been brewing for decades and now we want these fuckers in power to stop waisting everybody's lives.
Finally, I am sorry but you won't find a single source of unbiased info - especially not in r/chile because there's guys focused on pushing their side of the political agenda there, just like in twitter, facebook and instagram.”
The author makes the protestors sound like animals and Nazis (he compares them to Nazis at one point). His attempt at understanding their actual desires is frustrating but it makes sense when you put it into the perspective that he is a Chicago Boy and is pushing propaganda.
June 3, 2023
There’s hope in Chile.
June 5, 2024
As a standard history book, a 5; as an economic history (and applied theory) book a 3, hence the four.
Balance and moderation in most aspects of life tend to produce superior and lasting outcomes. The story of Chilean economic development since the advent of the Allende regime through the nightmare years of Pinochet, and on to the present (although the book takes one to 2019, and the surprising flirtation with a form of populism) reaffirms this maxim. Growth has been impressive but at the cost of extreme income inequality, and a general lack of constructive engagement with indigenous groups.
Chicago Economics in its orthodox form has always struck me a something best left in the classroom. Pure neo-liberalism works for the favored, but leaves the less-favored vulnerable and deprived. Let’s hope Chile can continue to build on the great good of its recent successes and provide enhanced welfare for all.
Balance and moderation in most aspects of life tend to produce superior and lasting outcomes. The story of Chilean economic development since the advent of the Allende regime through the nightmare years of Pinochet, and on to the present (although the book takes one to 2019, and the surprising flirtation with a form of populism) reaffirms this maxim. Growth has been impressive but at the cost of extreme income inequality, and a general lack of constructive engagement with indigenous groups.
Chicago Economics in its orthodox form has always struck me a something best left in the classroom. Pure neo-liberalism works for the favored, but leaves the less-favored vulnerable and deprived. Let’s hope Chile can continue to build on the great good of its recent successes and provide enhanced welfare for all.
September 13, 2023
After reading this book I realized that I knew very little about the recent history of Chile. This is a very good book that despite it’s obvious economic approach, doesn’t close itself to numbers and economic theories. The book covers social and political aspects and it is written in a very unbiased way. Until the end of the book, and somehow even after, it is hard for me to define the author’s opinion on the matters.
My only point to not give 5 stars is because the book speed the pace in the end and doesn’t provide the full context and all negative aspects of the Boric government and the 2022 constitution and all the bad examples that we have in the region with similar situations, such as Argentina and Brazil.
Anyhow. I recommend this book for all those interested in the region and in this great “project” that brought Chile to a premium tier in Latin America.
My only point to not give 5 stars is because the book speed the pace in the end and doesn’t provide the full context and all negative aspects of the Boric government and the 2022 constitution and all the bad examples that we have in the region with similar situations, such as Argentina and Brazil.
Anyhow. I recommend this book for all those interested in the region and in this great “project” that brought Chile to a premium tier in Latin America.
December 13, 2023
Valuable but dated
Very thorough analysis of the neoliberal experiment in Chile. I believe it misses the mark on a few points, but not all, on the causes of the 2019 revolt and the supposed end of neoliberalism in Chile.
The fact is that just one year after the book was written the political scenario in Chile has taken another drastic turn. Now a conservative and populist right dominated the writing of a new constitutional project, which may be rejected (again).
Neoliberalism is alive and well in Chile, quite unfortunately.
Very thorough analysis of the neoliberal experiment in Chile. I believe it misses the mark on a few points, but not all, on the causes of the 2019 revolt and the supposed end of neoliberalism in Chile.
The fact is that just one year after the book was written the political scenario in Chile has taken another drastic turn. Now a conservative and populist right dominated the writing of a new constitutional project, which may be rejected (again).
Neoliberalism is alive and well in Chile, quite unfortunately.
January 9, 2025
En este libro Sebastián Edwards relata la historia del convenio que dio inicio a la colaboración académica entre la Universidad de Chicago y la Universidad Católica, y cómo este convenio, firmado en la década de los 50, jugó un rol central en la formulación técnica de las reformas económicas materializadas más de 20 años después, y que permitieron que Chile pasara de ser un país que, en palabras del autor, "por décadas había tenido un desempeño mediocre a ser la economía más vibrante y avanzada de América Latina".
Lo notable de esta primera parte del libro es lo documentado que es el relato, dando cuenta de las granularidades de la historia, los personajes involucrados, las controversias que generaban las recomendaciones que traían de vuelta al país los egresados de Chicago (no solo la CEPAL se oponía a las políticas pro-mercado, sino también gran parte de los altos mandos militares, los conservadores, y también los empresarios). Que el autor haya experimentado de primera fuente esta parte de la historia de Chile, primero trabajando fijando precios en el gobierno de Allende y luego partiendo a estudiar economía a Chicago, es una característica importante que le agrega valor al libro.
No estoy de acuerdo con la interpretación que hace Edwards del estallido. Creo que se equivoca al poner el foco en la desigualdad, diciendo que aquella fue un área descuidada por parte de los Chicago Boys. Todas las estimaciones muestran que esta cayó de forma importante, cosa que además él mismo reconoce. Me parece que los 5 años de estancamiento del crecimiento previos al estallido es un factor muchísimo más relevante para explicar el malestar, como de cuenta la caída de los ingresos de las cohortes más jóvenes.
Tampoco creo que el estallido haya sido una respuesta a que el neoliberalismo en el país haya ido demasiado lejos ("It may be argued that the neoliberal point of view and its policies went too far for too long, and that his was self-undermining"). Antes del estallido, la utilización de políticas de mercado se venía desmantelando hace ya bastante tiempo, y creo, como Rodrigo Vergara ya lo señalaba en un trabajo del año 2003, que, al revés de lo que concluye Edwards, los policymakers entrenados en Chicago dejaron de materializar nuevas olas de reformas pro-crecimiento, olvidando que las que reformas que había hecho iban a tener rendimientos decrecientes en el tiempo.
Lo anterior también tiene que ver con la negligencia de "las ideas" por parte de quienes realizaron dichas reformas, cosa que pone de manifiesto Edwards al final del libro. Creo que la desaparición de las revistas Cuadernos de Economía (del Instituto de Economía de la UC), o Economía Chilena (la revista del Banco Central de Chile, descontinuada a fines de 2019) fueron una gran pérdida para la discusión pública del país. Cuando uno estudia la historia económica reciente de Chile, buen parte de las mejores publicaciones son precisamente de esas revistas, y hoy esos espacios ya no están. Creo que la mala calidad de las políticas públicas en la última década algo tiene que ver con esto.
Incluso estando en desacuerdo en algunas lecturas que hace el autor, me pareció un magnifico relato de la historia reciente de nuestro país.
Lo notable de esta primera parte del libro es lo documentado que es el relato, dando cuenta de las granularidades de la historia, los personajes involucrados, las controversias que generaban las recomendaciones que traían de vuelta al país los egresados de Chicago (no solo la CEPAL se oponía a las políticas pro-mercado, sino también gran parte de los altos mandos militares, los conservadores, y también los empresarios). Que el autor haya experimentado de primera fuente esta parte de la historia de Chile, primero trabajando fijando precios en el gobierno de Allende y luego partiendo a estudiar economía a Chicago, es una característica importante que le agrega valor al libro.
No estoy de acuerdo con la interpretación que hace Edwards del estallido. Creo que se equivoca al poner el foco en la desigualdad, diciendo que aquella fue un área descuidada por parte de los Chicago Boys. Todas las estimaciones muestran que esta cayó de forma importante, cosa que además él mismo reconoce. Me parece que los 5 años de estancamiento del crecimiento previos al estallido es un factor muchísimo más relevante para explicar el malestar, como de cuenta la caída de los ingresos de las cohortes más jóvenes.
Tampoco creo que el estallido haya sido una respuesta a que el neoliberalismo en el país haya ido demasiado lejos ("It may be argued that the neoliberal point of view and its policies went too far for too long, and that his was self-undermining"). Antes del estallido, la utilización de políticas de mercado se venía desmantelando hace ya bastante tiempo, y creo, como Rodrigo Vergara ya lo señalaba en un trabajo del año 2003, que, al revés de lo que concluye Edwards, los policymakers entrenados en Chicago dejaron de materializar nuevas olas de reformas pro-crecimiento, olvidando que las que reformas que había hecho iban a tener rendimientos decrecientes en el tiempo.
Lo anterior también tiene que ver con la negligencia de "las ideas" por parte de quienes realizaron dichas reformas, cosa que pone de manifiesto Edwards al final del libro. Creo que la desaparición de las revistas Cuadernos de Economía (del Instituto de Economía de la UC), o Economía Chilena (la revista del Banco Central de Chile, descontinuada a fines de 2019) fueron una gran pérdida para la discusión pública del país. Cuando uno estudia la historia económica reciente de Chile, buen parte de las mejores publicaciones son precisamente de esas revistas, y hoy esos espacios ya no están. Creo que la mala calidad de las políticas públicas en la última década algo tiene que ver con esto.
Incluso estando en desacuerdo en algunas lecturas que hace el autor, me pareció un magnifico relato de la historia reciente de nuestro país.
February 14, 2024
Depois de eleito por uma pequena margem, Salvador Allende promoveu inúmeras medidas econômicas, como a fixação de preços, estatização de empresas e aumento de tarifas comerciais.
Logo depois de implementadas, foram responsáveis por uma recessão profunda e forte agitação social que levaram à deposição do presidente pelo exército.
Pinochet assumiu o governo e rapidamente instaurou uma ditadura implacável com dissidências políticas.
Quase 20 anos antes, o EUA iniciava um programa de treinamento para jovens economistas chilenos na Universidade de Chicago.
Esses mesmos jovens foram responsáveis por definir as novas diretrizes econômicas, assim como sua condução.
Logo no início do governo, os preços foram liberados, as tarifas comerciais diminuídas, o câmbio depreciado e boa parte das estatais privatizadas.
Se nos primeiros anos, as medidas agravaram a recessão, posteriormente fizeram que a inflação cedesse e tornaram a economia do Chile mais funcional.
Nos anos 80, depois de uma crise internacional que causou uma fuga de capitais dos países emergentes e teve efeitos graves no sistema bancário que se financiava com títulos denominados em dólares, houve uma segunda onda de medidas de cunho neoliberal e o objetivo passou a ser a perseguição de crescimento econômico.
Nesse período, houve a ampliação do sistema de vouchers para a escola básica e para o sistema privado de saúde, a reforma previdenciária para o sistema de poupança individual, estímulos para o investimento privado e a complementação pública, além da fragilização dos direitos dos sindicatos.
Na década que procedeu a instauração dessas medidas, o Chile se destacou como país latino americano de maior crescimento e melhores índices de redução de pobreza e IDH.
O desempenho diferenciado, fez com que no período de redemocratizacao as medidas adotadas na ditadura não fossem revogadas, mesmo com a eleição de um governo de centro esquerda.
Apesar de aumentar ampliação dos programas sociais como o financiamento universitário garantido pelo Estado, os governos de esquerda adotaram medidas de identidade liberal como a implementação de uma regra fiscal e acordos de livre comércio.
O gradualismo implementado pelos governos de esquerda deram continuidade aos avanços nos indicadores econômicos e sociais. Tamanho sucesso ofuscou a visão da elite política que não antevia a crescente frustração da população.
Em 2019, essa frustração culminou em uma onda de protestos contra a desigualdade insistentemente elevada. Os protestos foram tão graves e as exigências tão severas que fizeram com que governante convocasse uma nova eleição e constituinte para revogar as medidas tão bem sucedidas dos últimos 50 anos.
O autor tenta entender as motivações do povo chileno para explicar tamanha revolta. A guerra de narrativas e índices subjetivos de desigualdade são apenas algumas das hipóteses aventadas pelo autor.
O que sabemos hoje é que o Chile se revoltou contra o modelo que o diferenciou de seus pares e a proposta de nova constituição o aproxima dos modelos fracassados da América Latina.
Logo depois de implementadas, foram responsáveis por uma recessão profunda e forte agitação social que levaram à deposição do presidente pelo exército.
Pinochet assumiu o governo e rapidamente instaurou uma ditadura implacável com dissidências políticas.
Quase 20 anos antes, o EUA iniciava um programa de treinamento para jovens economistas chilenos na Universidade de Chicago.
Esses mesmos jovens foram responsáveis por definir as novas diretrizes econômicas, assim como sua condução.
Logo no início do governo, os preços foram liberados, as tarifas comerciais diminuídas, o câmbio depreciado e boa parte das estatais privatizadas.
Se nos primeiros anos, as medidas agravaram a recessão, posteriormente fizeram que a inflação cedesse e tornaram a economia do Chile mais funcional.
Nos anos 80, depois de uma crise internacional que causou uma fuga de capitais dos países emergentes e teve efeitos graves no sistema bancário que se financiava com títulos denominados em dólares, houve uma segunda onda de medidas de cunho neoliberal e o objetivo passou a ser a perseguição de crescimento econômico.
Nesse período, houve a ampliação do sistema de vouchers para a escola básica e para o sistema privado de saúde, a reforma previdenciária para o sistema de poupança individual, estímulos para o investimento privado e a complementação pública, além da fragilização dos direitos dos sindicatos.
Na década que procedeu a instauração dessas medidas, o Chile se destacou como país latino americano de maior crescimento e melhores índices de redução de pobreza e IDH.
O desempenho diferenciado, fez com que no período de redemocratizacao as medidas adotadas na ditadura não fossem revogadas, mesmo com a eleição de um governo de centro esquerda.
Apesar de aumentar ampliação dos programas sociais como o financiamento universitário garantido pelo Estado, os governos de esquerda adotaram medidas de identidade liberal como a implementação de uma regra fiscal e acordos de livre comércio.
O gradualismo implementado pelos governos de esquerda deram continuidade aos avanços nos indicadores econômicos e sociais. Tamanho sucesso ofuscou a visão da elite política que não antevia a crescente frustração da população.
Em 2019, essa frustração culminou em uma onda de protestos contra a desigualdade insistentemente elevada. Os protestos foram tão graves e as exigências tão severas que fizeram com que governante convocasse uma nova eleição e constituinte para revogar as medidas tão bem sucedidas dos últimos 50 anos.
O autor tenta entender as motivações do povo chileno para explicar tamanha revolta. A guerra de narrativas e índices subjetivos de desigualdade são apenas algumas das hipóteses aventadas pelo autor.
O que sabemos hoje é que o Chile se revoltou contra o modelo que o diferenciou de seus pares e a proposta de nova constituição o aproxima dos modelos fracassados da América Latina.
January 5, 2024
Ideas in action. Economics. Sexy publisher.
This was a must-read for me, especially with Latin America fast-becoming an important part of my life. I think it's also timely in light of Milei's election in Argentina. Especially gratifying is that it's written by an economist. Sebastian Edwards takes us inside a well-known story. In order to deter the spread of communism, the State Department invited graduates from Católica to study at the most right-wing prestigious economics school in the USA, the University of Chicago. (I wonder why they didn't send them to MIT instead. I guess if you're going to spread capitalism, go big).
Under Pinochet's dictatorship, they implemented market-oriented policies that propelled Chile to the top of Latin America economically. Well, some of the right-wing policies didn't work so well, like the "shock therapy" that Milton Friedman recommended to deal with their financial crisis. It gave Chile prolonged massive unemployment. But under the dictatorship, they had enough time to fix their mistakes, and Chile's economic policies remained conservative long after it returned to democracy, and was even adopted by center-left parties.
Some of the policies were more conservative than anything the USA ever adopted, like school vouchers and private retirement accounts (they were pushed by George W. Bush but never passed).
It was rather comical to read about how some of the Chicago Boys responded when asked about the Pinochet's brutality. They claimed they were preparing an economic policy recommendations paper so thick they called it "el ladrillo" (the brick), and didn't know what it'd be used for. They had no clue it would be used by the new military government that would soon take over in a coup (uh-huh). When one of them, Sérgio de Castro, was asked whether he knew of Pinochet's massive human rights abuses, he said he heard about them, but didn't believe them--thought they were just Marxist propaganda.
One thing to note that all of the Chicago Boys denied they were "neoliberals" when asked by the author. That word is often used as a pejorative to denote extreme right-wing policies. They claimed they were "pragmatists." As an economics undergrad I never heard the word "neoliberal" in any of my econ classes. What we were studying was "neoclassical economics" (classical economics for the long run + Keynesianism for the short run).
This book is very, very policy oriented, with only a smattering of economic theory. I got most of it, but the part about exchange rates was difficult to understand.
This was a must-read for me, especially with Latin America fast-becoming an important part of my life. I think it's also timely in light of Milei's election in Argentina. Especially gratifying is that it's written by an economist. Sebastian Edwards takes us inside a well-known story. In order to deter the spread of communism, the State Department invited graduates from Católica to study at the most right-wing prestigious economics school in the USA, the University of Chicago. (I wonder why they didn't send them to MIT instead. I guess if you're going to spread capitalism, go big).
Under Pinochet's dictatorship, they implemented market-oriented policies that propelled Chile to the top of Latin America economically. Well, some of the right-wing policies didn't work so well, like the "shock therapy" that Milton Friedman recommended to deal with their financial crisis. It gave Chile prolonged massive unemployment. But under the dictatorship, they had enough time to fix their mistakes, and Chile's economic policies remained conservative long after it returned to democracy, and was even adopted by center-left parties.
Some of the policies were more conservative than anything the USA ever adopted, like school vouchers and private retirement accounts (they were pushed by George W. Bush but never passed).
It was rather comical to read about how some of the Chicago Boys responded when asked about the Pinochet's brutality. They claimed they were preparing an economic policy recommendations paper so thick they called it "el ladrillo" (the brick), and didn't know what it'd be used for. They had no clue it would be used by the new military government that would soon take over in a coup (uh-huh). When one of them, Sérgio de Castro, was asked whether he knew of Pinochet's massive human rights abuses, he said he heard about them, but didn't believe them--thought they were just Marxist propaganda.
One thing to note that all of the Chicago Boys denied they were "neoliberals" when asked by the author. That word is often used as a pejorative to denote extreme right-wing policies. They claimed they were "pragmatists." As an economics undergrad I never heard the word "neoliberal" in any of my econ classes. What we were studying was "neoclassical economics" (classical economics for the long run + Keynesianism for the short run).
This book is very, very policy oriented, with only a smattering of economic theory. I got most of it, but the part about exchange rates was difficult to understand.
October 19, 2023
Chile's political and economic history is quite the roller-coaster: in 1970 they elect the world's first Marxist government, Pinochet's military coup overthrows it three years later and begins bold neoliberal economic reforms, democracy returns in the 90s and carries on many of the economic templates of the dictatorial years, many countries look to Chile as a poster child for development, and then in 2019 long-simmering tensions resulting from unfair and unequal economic policies boil over and lead right back to a far left government. Such is the pendulum of Latin American politics ...
The Chile Project delves into the economic policies and choices made in Chile from the start of Pinochet's rule to the 2019 protests, the large majority of which were made by economists with deep ties to the University of Chicago and its then-famous neoliberal bent, churning out graduates with an indefatigable zest for free trade, privatization, and the loosening of government controls in favour of market forces. These economists (known as the Chicago Boys) under the dictatorship had a wide mandate to get things in order, and the book explores the successes and failures of the group both in short-term economic terms and in the decades after when the social cost of their experiments became more and more evident (for-profit universities, depleted retirement accounts, horizontal inequality, etc.), spurring the Estallido Social.
Overall the book is put together well and provides all the needed context to understand the country's circumstances. Aside from the core economic history, the author, who knows many of the Chicago Boys personally, pauses here and there to question the group's rewriting of their own history given the growing unpopularity of neoliberal thought by the mainstream (and by their association with a brutal dictatorship of course). There's also a pretty involved discussion of the protests and the resulting attempts at constitutional reform which went a bit too far beyond the scope of the book, but was nonetheless interesting. Would recommend for anyone interesting in South American economics and politics.
The Chile Project delves into the economic policies and choices made in Chile from the start of Pinochet's rule to the 2019 protests, the large majority of which were made by economists with deep ties to the University of Chicago and its then-famous neoliberal bent, churning out graduates with an indefatigable zest for free trade, privatization, and the loosening of government controls in favour of market forces. These economists (known as the Chicago Boys) under the dictatorship had a wide mandate to get things in order, and the book explores the successes and failures of the group both in short-term economic terms and in the decades after when the social cost of their experiments became more and more evident (for-profit universities, depleted retirement accounts, horizontal inequality, etc.), spurring the Estallido Social.
Overall the book is put together well and provides all the needed context to understand the country's circumstances. Aside from the core economic history, the author, who knows many of the Chicago Boys personally, pauses here and there to question the group's rewriting of their own history given the growing unpopularity of neoliberal thought by the mainstream (and by their association with a brutal dictatorship of course). There's also a pretty involved discussion of the protests and the resulting attempts at constitutional reform which went a bit too far beyond the scope of the book, but was nonetheless interesting. Would recommend for anyone interesting in South American economics and politics.
August 26, 2023
Un libro estupendo. Desde sus primeras páginas ofrece un balance equilibrado, documentado y serio sobre el proceso chileno de largo plazo. Desde el gobierno de Ibáñez en adelante, con la comisión Klein Sacks y otros antecedentes, Chile se fue preparando para una reforma liberal inédita que privatizó empresas públicas, estableció el cambio flotante, multiplicó el crédito, fortaleció los bancos, entre otros "milagros" ocurridos en la provincia.
Sin embargo, este proyecto se acabó. Ya con las protestas de 2006, 2011 y 2016, se observó la crujidera del "modelo neoliberal". Fue en 2019 cuando la caída quedó clara.
En este ensayo histórico, Edwards explica de forma clara, pedagógica y profunda las características del modo de vida hegemónico instalado en Chile, luego caído en desgracia y vuelto a ser considerado.
Sebastián Edwards es un economista, profesor, orador y consultor chileno. Es actualmente el Henry Ford II Profesor de Economía Internacional en la UCLA Anderson School of Management de la Universidad de California, Los Ángeles (UCLA). Desde 1993 hasta abril de 1996, fue el Economista Jefe de la Región de América Latina y el Caribe del Banco Mundial.
Sus artículos han aparecido en el American Economic Review, el Journal of Monetary Economics, The Economic Journal, Oxford Economic Papers, el Journal of Development Economics, el Quarterly Journal of Economics, el Journal of Economic Perspectives y otros journals profesionales. Edwards es editor asociado del Journal of International Trade and Economic Development, el Journal of International Financial Markets, Institutions and Money, y Analisis Economico. Durante casi diez años fue coeditor del Journal of Development Economics.
Sin embargo, este proyecto se acabó. Ya con las protestas de 2006, 2011 y 2016, se observó la crujidera del "modelo neoliberal". Fue en 2019 cuando la caída quedó clara.
En este ensayo histórico, Edwards explica de forma clara, pedagógica y profunda las características del modo de vida hegemónico instalado en Chile, luego caído en desgracia y vuelto a ser considerado.
Sebastián Edwards es un economista, profesor, orador y consultor chileno. Es actualmente el Henry Ford II Profesor de Economía Internacional en la UCLA Anderson School of Management de la Universidad de California, Los Ángeles (UCLA). Desde 1993 hasta abril de 1996, fue el Economista Jefe de la Región de América Latina y el Caribe del Banco Mundial.
Sus artículos han aparecido en el American Economic Review, el Journal of Monetary Economics, The Economic Journal, Oxford Economic Papers, el Journal of Development Economics, el Quarterly Journal of Economics, el Journal of Economic Perspectives y otros journals profesionales. Edwards es editor asociado del Journal of International Trade and Economic Development, el Journal of International Financial Markets, Institutions and Money, y Analisis Economico. Durante casi diez años fue coeditor del Journal of Development Economics.
July 28, 2024
The Chile Project is an excellent overview of the economic reforms and programs implemented by The Chicago Boys under the Pinochet dictatorship and continued by the Concertación governments.
To be clear, The Chile Project is not an analysis of the U.S. involvement in the 1973 coup nor does it document (at all) the human rights abuses committed by the Pinochet dictatorship.
Edwards concisely and chronologically lays out the political and economic situation leading up to the 1973 coup. He then details the proposed and implemented economic policies and reforms that Augusto Pinochet solicited from The Chicago Boys. Edwards does a great job of presenting these events, policies, and decisions in a neutral way.
However, in Chapter 15 on Chile's recent constitutional convention, Edwards cannot help himself in planting condescending quips against the far left. For example, Edwards states, among others:
It is unfortunate that Edwards couldn't resist showcasing his own disdain for the far left in what had, up until then, been a very balanced book. Additionally, the sort of legislative representation that the Chilean far left proposed is not unheard of in democracies. For example, India reserves 131 out of 543 seats in its lower house of parliament (the Lok Sabha) for representatives from Scheduled Castes and Scheduled Tribes. India also previously reserved two seats for representatives of the Anglo-Indian community (until 2020). The failure of the constitutional convention to gain the vote of the Chilean public speaks for itself. Edwards's dismissive quips against the far left are unnecessary and reduce his credibility as a neutral observer of the political/economic situation in Chile.
To be clear, The Chile Project is not an analysis of the U.S. involvement in the 1973 coup nor does it document (at all) the human rights abuses committed by the Pinochet dictatorship.
Edwards concisely and chronologically lays out the political and economic situation leading up to the 1973 coup. He then details the proposed and implemented economic policies and reforms that Augusto Pinochet solicited from The Chicago Boys. Edwards does a great job of presenting these events, policies, and decisions in a neutral way.
However, in Chapter 15 on Chile's recent constitutional convention, Edwards cannot help himself in planting condescending quips against the far left. For example, Edwards states, among others:
Several seats in the Congress were reserved for the eleven officially recognized Indigenous peoples. The fact that this amounted to gerrymandering at a national scale did not bother the Far Left.
It is unfortunate that Edwards couldn't resist showcasing his own disdain for the far left in what had, up until then, been a very balanced book. Additionally, the sort of legislative representation that the Chilean far left proposed is not unheard of in democracies. For example, India reserves 131 out of 543 seats in its lower house of parliament (the Lok Sabha) for representatives from Scheduled Castes and Scheduled Tribes. India also previously reserved two seats for representatives of the Anglo-Indian community (until 2020). The failure of the constitutional convention to gain the vote of the Chilean public speaks for itself. Edwards's dismissive quips against the far left are unnecessary and reduce his credibility as a neutral observer of the political/economic situation in Chile.
December 10, 2024
Not at all what i expected, and pleasantly surprised to find:
-- there's a lot more economics than I thought i would be comfortable with, knowing nothing, BUT
-- strangely readable and compelling!
also not what I expected, and pleasantly surprised to find:
I thought it would be typical biased polemic rip from which I might learn some history. But it's much more nuanced and balanced and i learned a lot I didn't know before, which muddles the simple narrative of the time:
-- Many of the most conservative military brass and in particularly the state security service, DINA, who together were responsible for much of the crimes against left wingers, were more like corporatists than free traders, and in particular that the head of DINA, when he wasn't ordering assassinations in DC, or blowing up dissident generals and their wives, he was spying on the University of Chicago "neo-liberal" free market economists and, with a bunch of "patriotic" generals, was very much against selling off state enterprises because they would harm the prestige of the state.
-- who knew Michel Foucault was so sneeringly dismissive of Salvador Allende? and so enthralled with Gary Becker?
Very good book to read to understand modern Chile and (among other things) the inequality that led to the riots that began in 2019, and the efforts to write a new constitution.
-- there's a lot more economics than I thought i would be comfortable with, knowing nothing, BUT
-- strangely readable and compelling!
also not what I expected, and pleasantly surprised to find:
I thought it would be typical biased polemic rip from which I might learn some history. But it's much more nuanced and balanced and i learned a lot I didn't know before, which muddles the simple narrative of the time:
-- Many of the most conservative military brass and in particularly the state security service, DINA, who together were responsible for much of the crimes against left wingers, were more like corporatists than free traders, and in particular that the head of DINA, when he wasn't ordering assassinations in DC, or blowing up dissident generals and their wives, he was spying on the University of Chicago "neo-liberal" free market economists and, with a bunch of "patriotic" generals, was very much against selling off state enterprises because they would harm the prestige of the state.
-- who knew Michel Foucault was so sneeringly dismissive of Salvador Allende? and so enthralled with Gary Becker?
Very good book to read to understand modern Chile and (among other things) the inequality that led to the riots that began in 2019, and the efforts to write a new constitution.
October 14, 2023
Its a good history of two things: economic ideas and Chile’s economic policies. The book is good on both fronts. It says that market reforms were desirable but that the reformers, because they dealt with a ruthless. By dictator, forgot that the ideas of economic liberty require pedagogy and suasion. Force is a terrible convincer. Yes, reforms were beneficial, but the non-democratic form of reforms meant that eventually they would be turned back.
The book makes a decent argument but it has flaws. It omits some of the recent literature using synthetic controls (Escalante, E. E. (2022). The Influence of Pinochet on the Chilean Miracle. Latin American Research Review, 57(4), 831-847) that shows that the reforms didnt make Chile exceptional. This throws a wrench in the argument but the microdetails Edwards furnished made me question that literature. This matters because the success/failure of reforms must affect how people reacted to it. At the very least, Edwards convinces that Chile’s free market economists really forgot that power corrupts in many ways — even when one is doing essentially a good action (i.e. liberalizing an economy).
The book makes a decent argument but it has flaws. It omits some of the recent literature using synthetic controls (Escalante, E. E. (2022). The Influence of Pinochet on the Chilean Miracle. Latin American Research Review, 57(4), 831-847) that shows that the reforms didnt make Chile exceptional. This throws a wrench in the argument but the microdetails Edwards furnished made me question that literature. This matters because the success/failure of reforms must affect how people reacted to it. At the very least, Edwards convinces that Chile’s free market economists really forgot that power corrupts in many ways — even when one is doing essentially a good action (i.e. liberalizing an economy).
September 5, 2023
The story of a group of Chilean University of Chicago economists who shaped the incredible expansion of the Chilean economy, starting under the Pinochet dictatorship and continuing until last year. The author is a Chilean economist, originally a fan of the ideas of Socialist president Salvador Allende, but who came to appreciate much of what the "Chicago Boys" were able to accomplish.
This book borders on being a textbook at times, so if you're not interested in the details of economic theory and policy you might find it dull in places, but unlike most writers on political issues Edwards is incredibly balanced, seeing the good and bad. There's no doubt that the Chicago Boys economic policies have been largely responsible for growing Chile's economy to the point where it is the best in Latin America, but its legacy of starting under Pinochet and not paying attention to the huge disparity between rich and poor even as poverty has all but disappeared has led to its recent rejection and the uncertain future that awaits Chile.
This book borders on being a textbook at times, so if you're not interested in the details of economic theory and policy you might find it dull in places, but unlike most writers on political issues Edwards is incredibly balanced, seeing the good and bad. There's no doubt that the Chicago Boys economic policies have been largely responsible for growing Chile's economy to the point where it is the best in Latin America, but its legacy of starting under Pinochet and not paying attention to the huge disparity between rich and poor even as poverty has all but disappeared has led to its recent rejection and the uncertain future that awaits Chile.
November 28, 2023
Given that the book isnt in spanish I will write my review in english.
The book is solid overall but has constant minor mistakes or flawed arguments. 2 Examples below:
1) When defending exchange rate flexibility the author points out that the biggest critics fears did not materialize. However that bar is way too low. The bar should be if the policy met the expectations of its defenders. In my opinion it did not.
2) The author points out that Boric was the only congressmen from Frente Amplio that signed the peace agreement in november 2019. He forgot that Revolución Democrática signed it!.
Having read other books. I feel Edwards is clearly one tier below the quality of French-Davis but is solid enough, and clearly better that some other works I have read about the chilean model. I would have rated it 3 stars for some of the flawed arguments but Im giving it 4 stars because of the effort of understanding inequality not only through economic lens but through social relationships overall.
The book is solid overall but has constant minor mistakes or flawed arguments. 2 Examples below:
1) When defending exchange rate flexibility the author points out that the biggest critics fears did not materialize. However that bar is way too low. The bar should be if the policy met the expectations of its defenders. In my opinion it did not.
2) The author points out that Boric was the only congressmen from Frente Amplio that signed the peace agreement in november 2019. He forgot that Revolución Democrática signed it!.
Having read other books. I feel Edwards is clearly one tier below the quality of French-Davis but is solid enough, and clearly better that some other works I have read about the chilean model. I would have rated it 3 stars for some of the flawed arguments but Im giving it 4 stars because of the effort of understanding inequality not only through economic lens but through social relationships overall.
July 17, 2023
Very solid if you are looking for an economic or political discussion of Chile’s past 65+ years. It is a tad weak as a merely historic exercise, but still worth the read. Having lived in Chile from August 1983 to July 1985, I find anything written about “mi segunda patria” interesting. Those 2 years were more essential to who I am today than just about anything else.
Sebastian Edwards has put together a great deal of facts from various political realities to make a worthwhile addition to the telling of the story of this unique and great nation. So glad he contributed to the telling of an essential history.
Sebastian Edwards has put together a great deal of facts from various political realities to make a worthwhile addition to the telling of the story of this unique and great nation. So glad he contributed to the telling of an essential history.
December 12, 2023
One of the best books read this year!! Sebastian Edwards presents a balanced and insightful perspective about the story of the Chicago Boys and their influence on the economic miracle that took Chile to highest income country in Latin America, but also on the flaws and setbacks of the model, namely the perception of inequality and of unfairness, which fueled some street revolts in 2021 and 2022 and led to the election of Gabriel Boric a far left activist. I'm a firm believer of capitalist and market oriented policies, but it is obvious that there are other subjective factors that influence the perception of citizens and that should be taken into account.
April 27, 2025
Enjoyable read. I’m not Chilean, but I’ve always been fascinated by Chile and its economic turnaround. As a quasi-Chicago boy himself, Sebastián Edwards gives a fair account of the events and policies from the Pinochet years through the 2022 plebiscite.
There’s a cautionary tale here, rooted in the old maxim that there’s no such thing as a free lunch. Governments must weigh the potential boost to real GDP offered by neoliberal policies against the risk of deepening inequalities that often result from deregulation and the erosion of social protections.
There’s a cautionary tale here, rooted in the old maxim that there’s no such thing as a free lunch. Governments must weigh the potential boost to real GDP offered by neoliberal policies against the risk of deepening inequalities that often result from deregulation and the erosion of social protections.
July 23, 2023
A very balanced overview of the economic situation in Chile following the Pinochet coup. Oft cited as the takeover by the ‘Chicago Boys’, Edwards provides an unvarnished version of their failures and successes that the policy changes wrought over the subsequent decades. Though educated at UofChicago, one never has the sense that the author had extreme bias one way or the other and was able to show the reader the array of outcomes.
October 2, 2023
It's a very interesting book. It is a very well-written, engaging, and interesting topic at a time when the size/role of the state in most economies has become so large that we are starting to see pressures to reign on it. I think that the lesson learned in Chile about how neoliberal policies were successful in terms of economic growth and reducing poverty but failed to reduce inequality is applicable to many of the developed economies.
March 8, 2024
Buen libro de la historia económica de Chile desde 1950, con buena cobertura de los hechos que rodean el convenio con la Universidad de Chicago. Llama la atención su tesis de que el modelo neoliberal fue profundizado durante la Concertación, a la vez que se incluyeron partes más inclusivas. Entrega buenas cifras, aunque le faltan comparaciones internacionales. Bastante macro, y no entra en el detalle de las políticas sociales (salvo pensiones).
March 21, 2024
An evenhanded account of Chile transformation from socialism to being the poster-child of neoliberalism, although the 2019 protests have caused Chile to change direction. The interviews by Edwards with key characters like Arnold Harberger, Sergio de Castro and his primary testimony on working on Project Cybersyn gives a 'fly-on-the-wall' experience. Although constitutional reforms have not been successful, it is clear that Chile is no longer a neoliberal country.
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