Eduardo Silva - The State and Capital in Chile: Business Elites, Technocrats, and Market Economics

Business Elites, Technocrats, and Market Economics

Eduardo Silva

First published 1996 by Westview Press, Inc.

Published 2019 by Routledge
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ISBN 13: 978-0-367-29629-2 (hbk)

The State and Capital in Chile

Chile emerged from seventeen years of military rule in the 1990s as a paradigm for free market economic reform and a model of democratic stability with greater social equity. The cumulative effect of these policies was Chile's metamorphosis from a highly protected, regulated industrializing economy to an open, free-market economy governed by prudent fiscal and stable monetary policies.

Observers look to Chile in search of lessons for other countries. They tend to stress the competence of economic policymaking teams insulated from social forces and the capacity of policymakers to learn from past mistakes in policy design, sequencing, and timing. To a large extent, this focus on the lessons of Chile rests on a particular interpretation of the relationship between capitalists and the state. Most of the literature on Chile's economic transformation argues that two factors suffice to explain the change: strong authoritarianism under General Augusto Pinochet and cohesive teams of free market-oriented technocrats with a capacity for learning. From this perspective, technocrats backed by a labor-repressing state carried out economic reforms over the objections of capitalists. The lesson: Strong states must insulate economic policymakers from social The lesson is considered valid for democratic governments as well. They too are advised to create highly cohesive technocratic policymaking teams with relatively high degrees of insulation from social forces. Policymakers are expected to remain in control of shaping agendas and formulating policy. Business, labor, and middle-class groups may be consulted afterwards, especially during the implementation stage of the policymaking process.

Competent policymakers, sound policy designs, social learning, and relative autonomy are undoubtedly important factors for economic reform. Yet the role of capitalists and landowners in Chile's neoliberal transformation has been consistently underplayed. This book argues that economic elites were more active in the policy process than previously thought; hence, they too are a necessary factor in the explanation of Chile's free-market economic restructuring. A comparison across three policy periods in authoritarian Chilegradual, radical, and pragmatic neoliberalismshows that distinctive, shifting (sometimes narrow) coalitions of businessmen and landowners, with varying power resources, played a significant part in the agenda-setting, formulation, and implementation stages of the policy process in each period. If the interaction between capitalists and the state existed in an extreme case such as the Chilean one, where the nature of the dictatorship and the cohesiveness of ideological technocrats made it difficult to discern, then it must be present in other cases as well. Furthermore, the evidence suggests that close interaction between capitalists and the state has been a central feature of economic and social policymaking in Chile's new democracy as well.