Thirty Years of Chilean Socialism
by Alejandro Reuss
Dollars and Sense magazine, January/February
In 1988, the Chilean Socialist leader Ricardo Lagos dared
to go on national television to denounce the country's military
dictatorship. Lagos pointed an accusing finger at the camera as
he said that Chileans would no longer tolerate General Augusto
Pinochet's repressive rule, then in its fifteenth year. It was
a high point of the "Campaign for the 'No"' - the campaign
to defeat the dictatorship in its own referendum, reject another
eight years with Pinochet as "president," and force
general elections - and the key moment in Lagos's rise to national
prominence. A cabinet minister in the two Concertacion (center-left
coalition) governments since the end of the military dictatorship
in 1990, last year Lagos became the first Socialist to win the
coalition's nomination for president. On January 16, 2000, he
narrowly defeated his right-wing opponent in the presidential
run-off election, becoming the second Socialist to win Chile's
It had been nearly 30 years since the election victory of
Chile's first Socialist president, Dr. Salvador Allende, and over
26 since the military coup that overthrew Allende and his "Popular
Unity" (Socialist-Communist) coalition government. Lagos,
whom Allende named ambassador to the Soviet Union shortly before
the coup, had been a close associate of the president's during
the Popular Unity years. Perhaps Socialist deputy Isabel Allende
was thinking of this history when she commented, at Lagos's March
2000 inauguration, "Obviously, I'm reminded of my father."
The Socialist Party, however, is very different now from what
it was in 1970. Seventeen wrenching years of military dictatorship
followed the 1973 military coup, and a decade of Concertacion
government has followed the 1990 return to civilian rule. During
this period, Lagos and others have pulled the Socialist Party
towards the political center. The Socialists backed the moderate
Christian Democratic Party's presidential candidates in the first
two post-dictatorship elections, and served as junior partner
to the Christian Democrats during the first two Concertacion administrations.
While Lagos's nomination as the Concertacion's candidate in the
2000 presidential election put the Socialists at the head of the
coalition, the candidate took pains to distance himself from the
legacy of the Popular Unity. On the campaign trail, he declared
that, if elected, he would govern not as Chile's second Socialist
president, but as its third Concertacion president.
The military dictatorship imposed many limits on Chile's "democratic"
transition. For the sake of unseating the dictatorship, the opposition
decided to work within these constraints. Politically, this meant
working within the authoritarian framework of the military dictatorship's
1980 constitution, during the transition and after the restoration
of civilian rule. Economically, it meant keeping government policy
within the general "free market" framework imposed by
the dictatorship. During the "Campaign for the 'No,"'
the opposition emphasized not only the dictatorship's human-rights
violations, but also the way its "neoliberal" economic
program had plunged millions of Chileans into poverty. The first
two Concertacion administrations did make a serious effort to
reduce poverty, mostly through expanded employment and social-welfare
programs, but they did not attempt to change the economy's basic
"free market" orientation. As second fiddle to the Christian
Democrats in the Concertacion, the Socialists accepted this. As
the leading party in Chile's new government, they show no signs
of changing course.
The new Socialist-led government's economy minister is a conservative
MIT-trained economist. Its finance minister is a Harvard-trained
former International Monetary Fund bureaucrat. So the heavy dose
of "free market" orthodoxy in its economic program is
hardly surprising. The Lagos administration has worked to accelerate
Chile's integration into the world capitalist economy, seeking
a NAFTA-like "free trade" agreement with the United
States. It has pledged to step up the privatization of state assets.
The government's plans for the state copper company, which accounts
for nearly 20% of Chile's export earnings, include joint ventures
with multinational corporations and investment by private mutual
funds. Meanwhile, one of Lagos's key economic advisors has called
for the privatization of the state oil company. The government
has also made it a top priority to balance the budget, whose 1999
deficit was equal to 1.5% of Chile's gross domestic product (GDP),
in order to keep inflation and interest rates down - in other
words, to make Chile a profitable place to invest.
Chile is just coming out of a major recession. In 1999, unemployment
topped out at 11.5%, as the economy contracted by over 2%. When
Lagos was elected, unemployment still stood at 8.4%, while the
inflation rate was less than 5%. The president has pledged a $14
billion public works program, in an effort to create jobs and
reduce unemployment. He has also proposed increased social-welfare
spending. These are the main ways in which the new government's
program departs from the neoliberal model. These aims, however,
are constrained by the government's commitment to a balanced budget
and rejection of tax reform. The resources for increased government
programs will come from increased economic growth, or they will
not come at all. Despite the fact that over three million (21.7%)
of Chile's people fall below the official poverty line, no major
redistribution of income or structural reform of the economy is
on the government's agenda.
FROM THE "CHILEAN ROAD" TO THE "THIRD WAY"
The conversion of the Chilean Socialists to the "free
market" religion, in part, reflects a worldwide trend. Lagos
and other moderate Socialists emulated Felipe Gonzalez, the former
Socialist prime minister of Spain, in reshaping Chilean socialism.
Gonzalez was the real pioneer of the "Third Way" - embracing
"free market" economics while proposing mild redistributive
and social-welfare measures - now championed by U.S. President
Bill Clinton and British Prime Minister Tony Blair. The fall of
the East bloc and the ensuing crisis of "socialism"
worldwide set the stage for the triumph of the "Third Way"
where social democracy or communism had been strong. The strategy,
however, became especially prominent where neoliberalism was strongest.
It is not surprising, then, that standard bearers for the "Third
Way," like Lagos, Blair, and Clinton, hail from the same
countries as Pinochet, Thatcher, and Reagan. In each case, the
way that neoliberalism engulfed its onetime opponents is rooted
in the country's specific history. In Chile, the conversion of
the Socialists has roots going back even before the military dictatorship
and its imposition of the neoliberal model, to the demise of the
The Popular Unity came to power on a platform of radical economic
and political reform - the start of a peaceful revolution called
"the Chilean road to socialism." Its economic program
included the nationalization of Chile's banks and largest private
companies; the nationalization of the copper industry (owned mostly
by big U.S. mining companies); a redistribution of land from the
country's largest estates to the rural masses; a redistribution
of income favoring workers and the poor; and the free public provision
of basic foods, health care, and education. The first year of
the Popular Unity was, economically and politically, by far its
most successful. Increased wages and public spending created an
economic boom, the land reform gained momentum, and the program
of nationalization boasted several major successes, including
the nationalization of the banks. By April 1971, when the Popular
Unity won over 50% of the vote in nationwide municipal elections,
the dream of socialism seemed close at hand. That was, however,
to be the zenith of the "Chilean road." The Popular
Unity's remaining years were marked by deepening political conflict,
social polarization, and economic crisis.
The government's economic plans foundered under the force
of supply shortages and inflation, which reached an annual rate
of 300% by the government's last year. Critics of the Popular
Unity have often characterized this economic crisis as an inevitable
result of the government's "expansionist" economic policies,
which had brought about big increases in mass purchasing power.
The causes of these problems, and the nature of the Popular Unity's
errors, however, were as much political as economic. The government
expected that increased demand would boost profits, which would
in turn cause increased investment. This scenario greatly underestimated
the political element in investment decisions. Chilean capitalists
were little inclined to invest for an uncertain future in the
new Chile. Economic disruption, in fact, became a major political
weapon wielded by opponents of the Popular Unity. The economic
crisis did not, by itself, bring down the Popular Unity government.
It did, however, contribute to the overall atmosphere of "chaos"
that provoked the military coup of September 11, 1973.
The economic crisis of the Popular Unity period is to Chile's
political culture what the hyper-inflation of the Weimar Republic
is to Germany's. In each case the purely economic consequences
were less important that the political fallout - the rise of the
Nazis in Germany, the destruction of democracy in Chile - and
in each country there is a primordial fear that these events will
be repeated, no matter how distant that prospect may seem from
the outside. (In the years after the restoration of civilian rule
in Chile, the Armed Forces repeatedly went on "maneuvers"
whenever the civilian authorities dared to act against their wishes.
These menacing gestures never failed to provoke fears of another
military coup.) The economic radicalism of the Popular Unity is,
in the consciousness of the Chilean left, the "original sin"
of Chile's tragic history- the transgression that brought the
fall. For a quarter century, the left has blamed itself for unleasing
the course of events that brought the military dictatorship to
power. (The military actually carried out the coup, the right
fomented it with violence and economic sabotage, and the center
was complicit in it - though they all seem strangely immune from
self-blame.) As a result, the left recoils from anything that
could make it responsible once again for such events. It has learned
the lesson, taught by the military dictatorship, that "utopian"
dreams end in disaster.
A FUTURE FOR CHILE?
Chile's "transition to democracy" remains incomplete.
After a decade of civilian rule, Chile remains under the military
dictatorship's 1980 constitution. To his credit, Lagos has proposed
constitutional amendments eliminating such "authoritarian
holdovers" as clauses granting lifetime senate seats to former
officials of the dictatorship, including Pinochet, and preventing
the civilian president from sacking Armed Forces branch commanders.
On one recent occasion, Lagos even dressed down the Armed Forces
high command for its vocal opposition to Pinochet's prosecution
on human-rights charges. Like his two civilian predecessors, however,
the president has generally taken care not to inflame the still-powerful
Armed Forces. He has largely taken a hands-off attitude towards
the prosecution of Pinochet. He has insisted that his relations
with the Armed Forces are "excellent," and that they
can work together for Chile. And he has declared that Chileans
should stop worrying about the past, concentrating instead on
their future together.
Fortunately, some Chileans have continued to worry about the
past, and the shadow it casts over their future. Only two years
ago, when Pinochet was arrested in Britain on human-rights charges,
it seemed to most observers that he would never face prosecution
in Chile. Today, he and his accomplices are beginning to lose
the legal immunity they granted themselves. Thanks largely to
the efforts of human-rights campaigners, especially relatives
of those "disappeared" (kidnapped and assassinated)
by the military dictatorship, the courts have opened the way to
the prosecution of several prominent human-rights violators, including
Pinochet himself. Pinochet could face trial, he could find some
legal escape (as he did in Europe), or he could escape judgment
in death. The aura of invincibility once enjoyed by the military,
however, has begun to erode.
Unveiled by Lagos in June 2000, a statue of President Allende
now stands in front of Chile's presidential palace, one small
symbol of the changes now afoot in Chile. The meaning of the Popular
Unity period - expunged from the history books by the dictatorship
- remains to be rediscovered. Though symbolized by Dr. Allende's
election, the "Chilean road to socialism" was not just
a change in who ruled Chile. Like the Prague Spring, it was a
glimpse of what a democratic and socialist society could look
like - and a direct challenge to the Cold War ideology that socialism
and democracy were incompatible. It sought not only to preserve
the measure of democracy that already existed in Chile but also,
in the words of the Popular Unity program, to institute "a
new system of power in which the working classes and the people
are the ones who really exercise power." More than any specific
set of policies, that should be the Popular Unity's legacy to
Chile - and Chile's legacy to the world.
Resources: James D. Cockroft, ed., Salvador Allende Reader:
Chile's Voice of Democracy; Peter Winn, Weavers of Revolution:
The Yarur Workers and Chile's Road to Socialism; Clifford Krauss,
"Ricardo Lagos Escobar: A Chilean Socialist in the Clinton-Blair
Mold," New York Times, January 18, 2000; Clifford Krauss,
"Chile's President-Elect: A Pro-Market Socialist," International
Herald Tribune, January 24, 2000; "President-elect says country's
economic prospects are good," El Mercurio, January 26, 2000;
Clifford Krauss, "Socialist is Charting Middle Way for Chile,"
New York Times, February 11, 2000; Bill Cormier, "New president
vows comeback for Chile's role-model economy," Associated
Press, March 9, 2000; "A wary socialist, the general and
Chile's future," Economist, March 11, 2000; Richard Chacon,
"Chile Leader Takes Oath, Backing Free Market," Boston
Globe, March 12, 2000; "Socialist Takes Office in Chile With
Nod to Poor, and the Market," New York Times, March 12, 2000;
"Chilean president kicks off post-Pinochet constitutional
reform," Agence France Presse, April 5, 2000; "President
Lagos annoyed over commanders' meeting, opposition remarks,"
Television Nacional de Chile, May 16, 2000; Federico Quilodran,
"Chile unveils Allende monument amid demands for Pinochet
trial," Associated Press, June 26, 2000; "Lagos to distance
himself from Pinochet case, focus on jobs, security," La
Tercera web site, August 11, 2000; "President Lagos urges
people to leave past behind," El Mercurio web site, August
11, 2000; "President says relations with armed forces could
be better 'as with everything,"' Television Nacional de Chile,
August 21, 2000.
Alejandro Reuss is a co-editor of Dollars & Sense.