Luis E. Cárcamo-Huechante
Excerpt Only
No quiero dejarles con falsos conceptos o con equívocos: no se logrará ponerle fin a la inflación sin pagar costo alguno, pero continuar con una inflación tiene también altos costos. En el hecho, Chile es un país muy enfermo y un enfermo no puede esperar recuperarse sin costo.
I do not want to leave you with any false impressions or ambiguities: there is no way to end inflation without some cost, but continuing with inflation will also have high costs. The fact is, Chile is a very sick country, and the sick cannot expect to recover without cost.
Milton Friedman, Santiago, 1975
Economist Milton Friedman's March 26, 1975, lecture in Santiago, Chile, constituted a pivotal moment in the symbolic transformation experienced by Chilean society during the years of the Pinochet regime.
Although organized by the School of Management and Economics at the Universidad Técnica del Estado (State Technical University) in Santiago, the lecture actually took place at the Diego Portales building, which served as the military junta's headquarters during its first years of government. Friedman's speech was published some months later under the emblematic title "Chile y su despegue económico" ("Chile and Its Economic Take-Off").1 It was an event during which certain symbolic components of state culture became detached from their historical frames of reference, thereby laying the groundwork for a market-centered matrix within Chilean society—that is, a market culture.2 This abandonment of the state planning model of previous decades and the shift toward a free-market economy in Chile were historically coupled with the violent military coup led by General Augusto Pinochet on September 11, 1973, against the socialist government of Salvador Allende. This political event dramatically interrupted the country's democratic life by instituting a dictatorship that would last nearly twenty years. The Chile that Friedman visited in 1975 was a country ruled by the heavy hand of military authoritarianism, which had imposed political repression and severe restrictions on free speech: hundreds of people were in prison or concentration camps, were subject to torture, or were obliged to seek asylum in foreign territories.3
Set against this scenario, Professor Friedman's visit to Chile marked a crucial turning point for the country's economy: at the time, the military junta was trying to decide between continuing the old state-centered economic model or shifting toward a free-market economy. Friedman was certainly not an activist, but at this juncture he performed the role of adviser in a highly publicized fashion. His visit had major consequences for the economic life of the country. His various activities in Santiago, including a face-to-face meeting with General Pinochet, tipped the balance in favor of a structural adjustment to the economy much more drastic than the military regime had previously been willing to risk. In essence, a shock treatment. This facilitated the victory within the regime of advisers who favored economic liberalization.4
Notes
Many thanks to Brad Epps, June Erlick, José Falconi, Joseph Florez, Catalina Ocampo, and Shirin Shenassa for the generous sharing of their time and intellect. I would also like to thank Silvia Alvarez-Curbelo, John Coatsworth, Fernando Coronil, Sebastián Edwards, and María Clemencia Ramírez de Jara for reading parts of my work and for bibliographic and terminological suggestions. An earlier version of this paper was published in Spanish as "El discurso de Friedman: mercado, universidad y ajuste cultural en Chile" in Revista de Crítica Cultural 23 (November 2001).
All translations within the essay are mine.
1. In the course of my investigation, I was not able to find a tape of Friedman’s live speech (most likely presented in translation from English to Spanish); therefore I have based my work on the transcript of the speech (published in Spanish in Friedman’s 1975 Chile y su despegue económico).
2. By market-centered matrix, I mean a socioeconomic philosophy or perspective like the one proposed by Milton Friedman, wherein the logic of the market economy constitutes the axis of all social interactions. Referring to "the power of the market," Milton and Rose Friedman wrote in Free to Choose, "Adam Smith's flash of genius was his recognition that the prices that emerged from voluntary transactions between buyers and sellers—in short, from a free market—could coordinate the activity of millions of people, each seeking his own interest, in such a way as to make everyone better off" (Friedman and Friedman 1990: 13).
3. During 1991, in the new context of democracy, the National Commission for Truth and Reconciliation (an entity created in April 1990 and also known as the Rettig Commission) examined 2,920 deaths as a result of human rights violations and political violence under the military regime in Chile. In August 1996, the successor of this commission, the National Corporation for Compensation and Reconciliation, confirmed 899 cases in addition to those documented by the Rettig Commission, bringing the total number of dead and disappeared victims to 3,197 (Roniger and Sznajder 1999: 26–28).
4. According to historians Simon Collier and William Sater, "in April 1975, after hearing the arguments and counterarguments of economists at a weekend conference at Cerro Castillo, Pinochet threw caution to the wind, coming down decisively in favor of the Chicago Boys," conferring extraordinary powers on his finance minister Jorge Cauas, and appointing Sergio Castro as minister of economy. All were strongly convinced that "market relations had to be imposed throughout society" and "entrepreneurial culture had to replace habitual dependence on the state" (Collier and Sater 1990: 365–66)
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