Economic Transformations in Chile: The Formation of the Chicago Boys

By Brender, Valerie | American Economist, Spring 2010 | Go to article overview

Economic Transformations in Chile: The Formation of the Chicago Boys


Brender, Valerie, American Economist


I. Introduction

The news reports that followed General Augusto Pinochet's death on December 10th, 2006, underscored the social divides his legacy left (Marino 2006; BBC News 2006). Major newspapers across the globe reported that groups both celebrating and mourning his passing clashed in confrontations that were broken up by the police. The BBC noted, "Despite his human rights record, many Chileans loved him and said he saved the country from Marxism, and put the country onto a path of strong economic growth" (BBC News 2006). Others view his regime through the brutal torture and "disappearances" he condoned as a "cure [that] was far worse than the disease" (Plummer 2006; See also Human Rights Watch 2003; Kornbluh 332-363). For some of his retractors his death was particularly painful since Pinochet died without undergoing a trial.

In March 2000, Eduardo Aninat, former Chilean Minister of Finance (1994-1999) and Deputy Director of the International Monetary Fund (1999-2003) wrote an analysis in the IMF's publication, Finance & Development, which highlights the debate on Chile's economic success since the mid-1980s. He claims that the post-Pinochet governments in the 1990s "deepened a wide range of 'first-generation' reforms that had begun in the 1970s" (Aninat 2000, 20). He lists trade liberalization and free trade agreements, reforms that began under Pinochet's economic team. (Aninat 2000, 20; also see Valdes 1995, 253-261; Hira 1998, 37, 99; Teichman 2001, 86). He cites Chile's 5.6% average real per capita GDP growth between 1990 and 1998 as an indicator of this success as well as Chile's reduction of those officially living in poverty from 38.6% in 1990 to 21.7% in 1998 (20). The UNDP Human Development report indicates that per capita GDP growth continued at roughly 3.3% between 2001 and 2006 (UNDP Data 2009). Chile's growth has therefore become a major source of academic interest (1) (Valdes 1995, 4).

Amidst analysis of Pinochet's economic reforms is an interesting story of how monetarist and free market ideas made their way into Chile's structuralist and Marxist economic thought. Current literature suggests that the penetration of monetarist ideas in Chile emerged primarily from the 1955 partnership established between the University of Chicago and a Chilean university, Universidad Catolica, which led to the training of over 100 students in Masters and PhD programs in the United States (Valdes 1995, 191). While scholars seem to agree on the transfer, conflicting accounts persist concerning the motivations and intended outcomes of the Chicago-Catolica agreements.

Naomi Klein's recent New York Times best seller, The Shock Doctrine: Rise of Disaster Capitalism paints the university agreements primarily as a U.S. political attempt to usurp Marxist and structuralist thought. Her account of these agreements is riddled with political coercion, which she claims was guided by the coalescence of two events: American ideological opposition to structuralism during the Cold War and the University of Chicago's desire for a country in which they could test their free-market ideas. (2) In her analysis of the Chicago Boys she omits analysis of general trends in economics, foreign aid and university training programs at the time. She gives little regard to Chile's economic environment surrounding the coup, and does not consider the views held by those involved in the agreements towards their intellectual activities.

Other academic summaries about the Chicago Boys seem to be mixed. Glen Biglaiser suggests that academic analyses tend to fall into one of several camps--those who claim that the fall of structuralism or Keynesian thought led to the rise of neoclassical economics in Latin America, those who claim that domestic groups such as businesses drove the transformation in economic thought in the region, and lastly, those who claim the transformation was driven by a concerted U.S. attempt to combat structuralism (Biglaiser 2002, 272). …

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