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Volume 65 / Social Sciences

POLITICAL ECONOMY: CHILE


PETER M. SIAVELIS, Associate Professor of Political Science, Wake Forest University

MICHELLE BACHELET'S HISTORIC 2006 VICTORY as Latin America's first self-made woman president with no connection to a political husband fit well with the story of Chile as a rapidly modernizing polity and economy. While inequalities in income and access to social security, health care, and education have been recognized, most of the economic news out of Chile in the early 2000s continued a trend of casting the country as a success story, particularly given many of its comparative regional referents. However, the early missteps of the Bachelet government (2006–2010) revealed some problems in this otherwise positive economic story. The disastrous launch of the Transantiago transport reform, widespread student and labor protests, and criticisms of Bachelet's Finance Minister Andrés Velasco for alleged penny-pinching in his management of the country's copper reserve, left the administration open to charges of incompetence and insensitivity to the country's stark inequalities. Velasco resisted intense political pressure, mostly from workers and students, to spend some of the copper windfall. When copper prices abruptly fell due to the 2007–2009 financial crisis, accumulated funds were used to support a comprehensive stimulus package which has spared Chile the depth of economic crisis experienced by other countries in the region. Bachelet (and Velasco's) popularity have rebounded, and the country is again being praised for its wise economic management and relative regional economic success.

Part of the reason for this success is a general consensus across the political spectrum, with the exception of the far left, regarding Chile's economic model. Literature in the past spent a good deal of energy attempting to place credit or blame either with former dictator Augusto Pinochet or with the center-left Concertación governments that have ruled Chile since the return of democracy in 1990. With the passage of years, constant tinkering with the model and the moderate left's acceptance of a market-oriented economy make it difficult to say who deserves credit for successes or blame for failures. The frequently cited idea that there is no difference among Chile's mainstream political parties when it comes to economic policy is, however, also misleading. As Waissbluth and Inostroza (item #bi2008002870#) note, there is disagreement between the country's two major coalitions regarding the particular type of market capitalism to follow. The right is generally more sympathetic to the growth-oriented American model characterized by low taxation and high influence for corporations and the moderate left more likely to support a greater role for the state and be more concerned about inequality. In addition, the non-Concertación left remains marginalized and unrepresented as noted by Lishchetti (item #bi2008001083#).

Even though most literature has moved beyond debate on the model per se, however, several recent works have looked at the development of Chile's successful economy through new interpretive lenses. González (item #bi2009000207#), in his comparative study of Chile and Mexico, points to the longer term political variables which were permissive contextual conditions of Chile's success, including an agreed upon electoral framework and constitution and the existence of institutionalized parties and a strong executive. Silva (item #bi2009001762#), on the other hand, explores another longer term, yet largely unexplored, cause for the periods of relative peace and prosperity in Chile interrupted occasionally by authoritarian politics. In particular, he shows how Chile's technocrats, who often linked to authoritarian governments in the literature, historically contributed to the development of party programs and often played a mediating role that helped to sustain democracy in Chile. Finally, Taylor (item #bi2009000204#) argues that Chile's free market orientation has really grown from the development of a new and specific normative theory of society that grew out of the military's transformative project.

Numerous other recent works have similarly left behind the debate on the "Chilean model," raising the perhaps more important questions of Chile's position in the global economy and the impact of globalization on the country. Cademártori (item #bi2009000202#) points to the changing nature of global capitalism and analyzes its impact on Chile, proposing that a new model of global capitalism has developed, characterized by the domination of a limited number of transnational corporations. This new model has affected all major aspects Chile's economy including agriculture and mining, and has shaped the development of trade policy, particularly with the US. Fazio takes a contrasting view (item #bi2009000201#). He argues, rather, that the effects of globalization cannot be understood by analyzing only a particular moment in time. He points to globalization as a centuries' long process that has affected economic policy-making in Chile, pitting global forces against Chile's tendency to organize its economy around a state-centered matrix.

Given Chile's extraordinary inequality in income and access to education and social services, distributional concerns continue to be a dominant theme in the political economy literature. However, many works have gone beyond general analyses of inequality to focus on the nuts and bolts of the causes and consequences of it. Matear's study of educational inequality is a good example (item #bi2008001446#). She uncovers the economic, class, and cultural forces that have helped to drive the development of inequality in the educational system. Two excellent studies of labor also introduce more nuanced accounts of the causes, nature, and consequences of inequality. Berg (item #bi2009000208#) explores the impact of free trade on Chilean wages, presenting a much more comprehensive analysis than most previous works. Contrary to some studies, she finds that firms do not necessarily shift production in ways that benefit low-skilled labor where labor is cheap. Sehnbruch (item #bi2009002095#) moves beyond the usual approach of measuring the quality of labor market in terms of unemployment or wage levels. Instead, she develops a comprehensive quality-of-employment measure that better captures the objective conditions of Chilean workers. Posner, (item #bi2009000205#) on the other hand, is concerned with the impact of inequality on political representation. He finds that the social and economic transformations associated with neoliberalism have diminished the capacity of the marginal poor to engage in collective action, while enhancing the economic and political leverage of business elites.

A series of very engaging and innovative studies explores the strengths and weaknesses of the Chilean economy (item #bi2009002096#) the pension system (item #bi2008001121#), efforts aimed at improving virtual government (item #bi2009000203#), and efforts at eliminating patrimonialism and promoting technocratic orientations in state agencies (item #bi2008003044#). This is all very good and promising work. The biggest lacuna in the political economy literature on Chile, however, is a perspective on the bigger issues of where the Chilean economy needs to go to maintain its dynamism. Unfortunately, just like governing elites, much of the literature fails to explore where Chile fits in the emerging global economy as a country with a middle level of development, relatively expensive labor in developing world terms, few energy resources, and little in the way of a comprehensive national industrial policy. Research on this broad topic is much needed.


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