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Volume 63 / Social Sciences

POLITICAL ECONOMY: BOLIVIA AND PERU


JO-MARIE BURT, Assistant Professor of Government and Politics, George Mason University

AUGUSTO PINOCHET'S DECEMBER 2006 DEATH temporarily resurrected the debates concerning his economic legacy that so dominated the immediate postdictatorship period. Nonetheless, these debates were both short-lived and largely limited to the popular press and op-ed pages of the world's newspapers. In contrast, the academic literature on the so-called Chilean economic miracle has advanced substantially since the initial ideologically charged debates on Pinochet's legacy to critically evaluate the performance of the country's economy under democratic governments. With Socialist Michele Bachelet's ascension to the presidency in 2006, and with almost two decades of Concertación alliance governments overseeing economic success unprecedented in the region, analysis has shifted to reflect Chile's post-transitional political realities as well as its current stage in economic development. Early successes that resulted from the economic model must be consolidated and the increasingly recognized weaknesses addressed.

The point of departure for initial debates on Chile's free market model began with enthusiastic support on the right and grudging acceptance on the left. Debate has now shifted, with the left and right moving closer to a consensus on a market economy, export promotion, and limited and gradual social reform. Most analysts also agree that democratic governments have been successful in both managing the economy and "reforming the reforms" of the Pinochet era (item #bi2003006742#). Despite this reality, enduring tensions remain in the scholarly literature, and distinct visions for Chile's future exist (item #bi2006003646#). Since about 2000, and with much more empirical evidence on the workability of the innovations of the neoliberal experiment, the Chilean model has come under an increasingly critical lens. This criticism has taken one of two forms. Scholars either have suggested adjustments to policies that are considered successes, or have pointed to areas where economic policies have failed. Three major areas that have been the focus of recent scholarship on Chilean political economy illustrate this case: poverty reduction, labor and social policy, and the role of the state in the economy.

The meta-narrative of the recent literature on poverty in Chile is that the percentage of the population living in poverty has decreased as a result of a combination of spectacular economic growth and creative public policy. Despite dramatic poverty reduction, however, overall levels of inequality have increased. Escobar questions this story, arguing that data consistently underestimate the number of people living in poverty who cannot meet their basic needs, and that the situation of the poor is much more dire than is usually acknowledged (item #bi2007002228#). Others confirm the conventional wisdom that poverty has been reduced, but differ as to the source of the reduction. Some argue that it has more to do with economic growth than social policy, though they continue to acknowledge that inequality plagues Chile (item #bi2007002226#). Other sources of inequality analyzed in the literature include gender and the structure of work contracts (item #bi2007002223#) and the unlikely political alliances that perpetuate rural poverty (item #bi2004003898#).

Labor and social policies are, of course, also at the core of continuing debate on inequality. Much recent literature has been devoted to exploring the lack of reform in Pinochet's repressive labor legislation and its perilous consequences for workers. Frank explores the political reasons for a lack of reform (see HLAS 61:3274), while others tie continued labor exploitation to Chile's position in the global economy and the contradictions and tensions that Chile's economic model itself produced (items #bi2007002227#, #bi2007002231#, and #bi2006003602#). Haagh deepens this analysis by showing the consequences of labor union atomization for democratization and the social and political engagement of workers (item #bi2006003641#).

Social policy has also come under a critical microscope, as income inequalities are mirrored in vast inequalities in the educational, health, and social welfare systems. Furthermore, most acknowledge that Chile's much-vaunted privatized social security program is entering a state of crisis, with the recognition that few Chileans have accumulated enough assets for a minimum retirement. Edwards and Edwards do recognize, however, that social security has been tied to a modest increase in informal sector wages (see HLAS 61:3270), but the general consensus is that the social security system is in need of additional and dramatic reforms. Massive student protests in 2006 also pointed to inequities in the educational system, which the Bachelet government has pledged to combat. Recognition of the severity of the challenges that the educational system faces is shared across ideological sectors. The left has been the most vocal in advocating for more resources, a move away from market mechanisms, and reform of Pinochet-era educational legislation. However, support for reform also exists on the more conservative side of the spectrum, with Beyer recognizing the importance of not just increasing education spending, but rather, focusing on the connection between the quality of education and its contributions to human capital and the reduction of inequality (item #bi2007002225#).

The role of the state in encouraging economic growth, development, and exports has also come into more critical focus, with more serious analysis in the political economy literature. Common perceptions of the Chilean model are of a limited state role. However, the literature shows that state involvement in promoting economic development—though not expansive—is indeed important and can and has been targeted wisely. Bauer emphasizes the positive outcomes associated with privatization in water resources, but also analyzes the areas where market reforms have failed (item #bi2006003607#). Others highlight the crucial role the state has played in investing in infrastructure development, and the contribution of this investment to economic growth (item #bi2007002230#). Parilli argues for reassessing the role of the state in economic development, supporting the abandonment of the import substitution industrialization model, while underscoring the unevenness of neoliberal reforms in concentrating export activity among a small number of economic actors (item #bi2007002229#).

The relative consensus that characterizes the literature on political economy in Chile mirrors an economic consensus among Chilean elites concerning the country's economic model. In this regard, Chile stands out in a region rife with conflict over the essentials of economic policy. Nonetheless, with some of the worst levels of inequality in the world, and a sense that the democratic transition is complete, a growing fault line between economic elites and society has the potential to develop into more serious conflicts if Chileans do not address deep inequalities in income, education, and social security. Debates on measures to combat inequality promise to make for lively discussion in the future literature on Chile's political economy.


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