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POSTAUTHORITARIAN AND DEMOCRATIC NEOLIBERALISM:
Paula Pereda-Perez & Christopher A. Howard
is article traces the neoliberal trajectories of two Pacific Rim countries, Chile
and New Zealand. In Chile, neoliberal policies were introduced in under
a totalitarian military regime. By contrast, in New Zealand these were imple-
mented by a democratically elected Labour Government in . Although in
both cases the radical implementation of neoliberal policies has led to grow-
ing inequality and job insecurity, the two societies differ dramatically in their
contemporary responses to neoliberalism. Large-scale social movements and
protests against the neoliberal ‘model’ have been having a systemic impact
on Chile since , while the majority of New Zealanders continue to dem-
onstrate their support of neoliberal policies under the centre right National
Government, now in its third term. Whether neoliberalism was implemented
under democratic or authoritarian governments, we argue, is central to un-
derstanding its contemporary support and legitimacy in the Pacific Rim and
beyond.
Keywords: neoliberalism; authoritarianism; democracy; Chile; New Zealand
Since the global financial crisis of , the uncritical support of neoliberal
ideology has progressively declined in most of the developed world (Coul-
dry ; Duggan ). is has occurred at the same time that developed
economies have experienced economic recession or slow growth (Bailey and
Chapain ; Rosenberg ). Unemployment and inequality, two prob-
lems commonly associated with developing countries and flawed democracies
(Przeworski ; Robinson ), have jumped in most of the consolidated
economies ( ; ). Meanwhile, globalised and open markets
have facilitated domino effects, intensifying the consequences of the finance-
SITES: New Series · Vol 12 No 1 · 2015
led neoliberal crisis in advanced economies (Bourdieu , ).
As the defining paradigm of our times, neoliberalism is an ideology and
laissez-faire economic system based on unregulated markets, privatisation,
the roll-back of the state and the promotion of individual freedom. While
neoliberalism has its roots in classical liberal ideology (Gane ), Springer
() traces its rise in the mid to late twentieth century, where it occurred as
a response to the state-led atrocities of Nazi Germany, Fascist Italy and the
Soviet Union. With different degrees of intensity and orthodoxy, neoliberal
policies were first implemented in the s in Latin American. Although neo-
liberalism was initially reactionary to violence and actually pro-democracy,
paradoxically such policies were implemented by authoritarian regimes fol
-
lowing violent military coups backed by the United States government of the
Cold War era (Faulk ; Prashad and Ballve ; Silva ; Taylor ).
In many countries of the developed world, neoliberalisation began roughly a
decade later in the s and was initiated by the so-called well-established
democracies (Harvey ; Swarts ), namely the United Kingdom, the
United States, Canada, Australia and New Zealand. Compared to the devel-
oping world, the first neoliberal governments in the developed world were
economies already based on a consolidated productive industry. In these
economies, there was a growing consensus that neoliberal principles such as
deregulated markets and individual choice were the paths to economic pros-
perity. A spreading neoliberal ideology was especially critical of the role of the
state, which was seen as unproductive and inefficient, diminishing entrepre-
neurial initiative and soaking up money that might be productively invested
elsewhere (Harvey ).
Although neoliberal policies were imposed in Chile in the early s, the
influence of neoliberal doctrine had been building in the two previous dec-
ades as a counter to state-led development initiatives. Partly as a result of the
Great Depression and World War II, Latin American economies from the s
onwards were characterised by an incipient industry under the Import Sub-
stitution Industrialization model (). e was a developmental strategy
aimed at expanding the economic structure from one based on the extraction
of raw materials to one based on the production of commodities. Enacted by
countries of the Global South under the support of United Nations Economic
Commission for Latin America (, established in ), policies
were designed to facilitate development and self-sufficiency through the crea-
tion of internal markets (see Vellinga ; Bustelo ). Dependency theory
also provided the foundations of the model by critiquing the prevailing
Article · Pereda-Perez & Howard
modernisation theory, which had failed to solve problems of widespread pov-
erty and underdevelopment. As opposed to relying on foreign investment, the
model emphasized inward economic development through the nationali-
zation and subsidization of key industries (e.g. agriculture, power generation),
increased taxation and protectionist trade policies (for further discussion, see
Dello Buono and Bell Lara ; Bustelo ; Garretón ; Vellinga ).
Plausibly, in response to these state-led development policies, during the
s and s, a nascent neoliberal ideology spread among business and
professional elites in Latin America and a number of neoliberal organisations
emerged (see Bailey ). is imported ideology held that private enterprise
was the only model of development and paved the way for the neocolonial and
fascist orientations underpinning the implementation of neoliberal policies
across most of the region during the s and s; notorious examples
include Brazil, Chile, Argentina, Mexico, Peru, and Uruguay (Rabiela ).
Departing radically from the model, this policy shi imposed a model of
development, based on the generation of profit via trade instead of production,
onto developing economies. It is important to recognize that these policies
emerged from and were designed for developed economies.¹ e military dic-
tatorships across Latin America abruptly ended the developmental strat-
egy, severely limiting the development of local industries and favouring the
concentration of capital in the name of the neoliberal doctrine (for the case of
Chile, see Ffrench-Davis ).
With these different political trajectories in mind, this article is guided by two
inter-related questions: ) Why are contemporary societal attitudes and re-
sponses to neoliberalism more favourable in some societies and not others?
) What do these different attitudes and responses say about the legitimacy of
neoliberalism today? In an effort to begin answering these questions, we shall
distinguish what we term ‘democratic neoliberalism’ from ‘authoritarian neo-
liberalism’, the latter of which has evolved into what we call ‘post-authoritarian
neoliberalism’. e key difference between the two, as will be unfolded below,
is that in the case of the former, the implementation process was conducted
by democratic governments, whereas in the latter, it was led by military dic-
tatorships. A central contention here is that democratic neoliberalism, by the
virtue of taking place under democracy, conveys a mandate of ethico-political
accountability, whereas authoritarian neoliberalism prescinds from it. As we
aim to show, neoliberalism under authoritarian and post-authoritarian re-
gimes facilitates a politics of radical unaccountability, evidenced by increased
inequality and social injustice. Considering these radically different political
conditions helps to shed light on the variety of societal attitudes and responses
SITES: New Series · Vol 12 No 1 · 2015
to neoliberalism in contemporary times, exemplified here by radical dissent in
Chile, and general support in New Zealand. is comparative approach thus
contributes to research which calls for more nuanced, contextually specific
readings of neoliberalisms, rather than neoliberalism as a singular, monolithic
political-economic framework or policy (see Brenner, Peck, and eodore
; Connell and Dados ; Springer , ). While seeing neoliberal-
ism through concepts such as hybridity, variegation and articulation helps to
sharpen theoretical understandings of multiple neoliberalisms, our primary
concern here is to identify how different political contexts affect the legitimacy
of neoliberalism in the Pacific Rim and beyond.
e article is organized in three sections. e first and second examine the
socio-political trajectories of Chile and New Zealand before and aer their
respective neoliberal turns. Here we give special attention to the historical
context and political ideologies behind the implementation of neoliberalism
to date. We discuss the implications of shiing to a market driven economy
from a military dictatorship in the case of Chile and from a social democracy
in the case of New Zealand. Building on this, a third section surveys the simi-
larities and differences of democratic and post-authoritarian neoliberalism in
recent times.
- : ’
Large-scale neoliberal reforms were implemented in Chile before anywhere
else in the world despite some early localised initiatives in countries like Costa
Rica and Colombia (Bailey ). is ‘world first’ occurred aer a dramatic
process of socio-political and economic instability. e Chilean way to social-
ism under Salvador Allende’s government from – had experienced a
systematic boycott by the traditional elites, who saw it as a threat to their inter-
ests (Bucciferro ). As the leader of the le wing coalition, ‘Popular Unity’,
Allende was not only the first socialist president in the world to be democrati-
cally elected, but was also the first to attempt to move to socialism by peaceful
means. However, tensions within both the government and the opposition, and
widespread social agitation, intertwined with the radical changes of that pe-
riod. is unstable situation lead to a US-backed military coup on September
th, . On this infamous day, Allende’s government was overthrown by the
Chilean military under the rule of General Augusto Pinochet, thus marking
the beginning of an oppressive totalitarian regime that would officially last
until , but whose legacy continues in the present.
Article · Pereda-Perez & Howard
e neoliberal experiment of the Chicago Boys carried out by the military gov-
ernment from meant a radical overhaul of the country’s economic policy
(Delano and Translaviña ).² is sudden shi also represented a drastic
departure from the socialist model of development and welfare state in place
under Allende.³ It also meant a drastic departure from a democratic tradition,
which was abruptly interrupted by the military dictatorship, who dismantled
the national congress, the electoral system and banned political parties. Other
legacies of the dictatorship, along with the restriction of civic and political
rights of that time, were human rights violations such as torture, disappearance,
murder, exile and illegal adoptions (Nagy and Leiva ; Pino-Ojeda ;
Oppenheim ; Valenzuela ).
e first stage of the Chilean neoliberal ‘model’, occurring from to ,
was characterised by a fierce orthodoxy of the neoliberal principles designed
by the Chicago Boys. ese included deregulation, privatisation, a residual or
minimal welfare state and market-oriented economic policies. In response to
the policies adopted during these years, however, the economy became volatile,
culminating in a crisis caused by the devaluation of the exchange rate, dou-
bling of external debt and a decline in exports. Together with a dramatic reduc-
tion in social spending, the country experienced high rates of unemployment,
declining wages, business failures and discouragement of investment (Ffrench-
Davis and Stallings ). e long-term dictatorship (–) not only
institutionalised one of the most extreme forms of neoliberalism (de la Barra
; Winn ), but also perpetuated an undemocratic culture through the
development and implementation of a new constitution and legal framework
(Mirowski and Plehwe ) that has only recently began to change.
Unlike other countries in Latin America, Chile’s return to democracy in
occurred as an agreed transition between the military and political elites (Go-
doy ). is democratic transition established the autonomy of the neolib-
eral system, which would be protected from political contingencies. e under-
lying aim of this political orientation was to promote trickle down economics
by increasing the capabilities of businesses and benefits to those with upper
income levels, whose wealth would eventually reach the poor.
In the post-authoritarian neoliberal period from onwards and now under
the Washington Consensus, further privatisation has been undertaken along
with lower tariffs (Kuczynski and Williamson ; Miller and Pacific Council
on International Policy ). Nevertheless, there has been greater emphasis
on social spending, aimed at growth with equity, reducing poverty and unem-
ployment and above all, safeguarding macroeconomic stability (Ffrench-Davis
SITES: New Series · Vol 12 No 1 · 2015
; Luna and Seligson ). In the post-dictatorship period, Chile has dis-
played sustained economic growth, ranking high in the region for transparency,
safety and income per capita (Fernández Jilberto ; ; Trans-
parency International ). Moreover, in the global economic crisis
had relatively minor consequences; economic growth remained stable, unem-
ployment declined and market income increased significantly ( c,
). Until , however, these seemingly positive outcomes eclipsed pending
tasks for furthering democracy and moderating the extreme concentration of
wealth that followed the return to democracy (Nagy and Leiva ). Neolib-
eralism has steadily come under attack and been largely discredited, as shown
by the widespread social movements that ignited from the massive student
uprising that began in (Hernández ; Mayol ), as discussed next.
e primary reason for widespread social discontent in Chile is the country’s
income distribution and inequality, one of the worst among the coun-
tries. Chile also has one of the most expensive education, health and pension
systems in the world (see Castillo ; ; a,b; De Mesa and
Mesa-Lago ). In addition to this, there has been an ongoing deterioration
of working conditions marked by the precarisation of the job market and a
very weak labour legislation (López, Figueroa, and Gutiérrez ; Winn ;
b). e environment has experienced dramatic deterioration as a
result of an intensive and indiscriminate extractive and productive process,
which has led to severe air, soil and water contamination (Palma et al. ;
Tchernitchin et al. ; Cifuentes et al. ; Hopenhayn Rich et al. ;
Ferreccio et al. ). is all reflects a state that has ceded the control of its
economy to the market (Larraín ). Citizens’ expectations of democracy,
meanwhile, have evolved towards greater demands for political participation,
representation, equality and social justice.
Given Chile’s turbulent recent history, social demands and protests have been
widespread. is is by no means unique to Chile. Latin American countries
have had a long trajectory of mass mobilisation and social activism, which
became more salient with the arrival of military dictatorships and neoliberal
policies since the s (Dello Buono and Bell Lara ). In the case of Chile,
the large-scale social mobilisation triggered by the student movement since
has been the most significant expression of discontent since the country
returned to democracy and has had a systemic impact. Moving beyond the
students’ immediate interests in education quality and funding, the movement
grew to question what is at the heart of Chile’s inequality. Underlying these
social questions is the popular view that Chilean society is unfair and that as
a result of the growing concentration of wealth, the levels of exploitation and
Article · Pereda-Perez & Howard
vulnerability of large sectors of society have progressively worsened. In other
words, while students began demanding better education and transparency
in the funding system, they ended up questioning the neoliberal ‘model’ itself
that is at the core of Chile’s widespread inequalities (see Titelman ; Torres,
Guzmán and Riquelme ).
A close and public examination and debate on the impact of the laws that rule
higher and secondary education showed extended and systematic fraud and a
mercantilist approach to education (Hernández ; Mayol ; Monckeberg
; Simonsen ), phenomena also found in the health and pension sys-
tems, the productive and employment sectors (Fazio ; Mönckeberg ).
Numerous corporate scandals involving retirement funds, health insurances
and education have put politicians’ conflict of interest into the spotlight, with
several politicians implicated in major corruption scandals. A recent wave,
including President Bachelet’s family, has further damaged Chile’s already de-
teriorated political institutions (see Arellano and Carvajal ; Bogolasky ;
de la Barra ; Chávez, Baires and Ramírez ; ).
is has all led to a systemic crisis of legitimacy of the market, the state and
politics in Chile. While the effervescence of the social movements has gradu-
ally abated since , the push for a progressive tax system, constitutional
and pension reforms and mechanisms of direct democracy, such as referen-
dums, remains strong.⁴ On the whole, Chilean society is more critical than
ever of what has been termed ‘the culture of abuse’ (Araujo ; Escalona
; Oppliger and Guzmán ) instituted by an oppressive and perverse
state neoliberalism.
Despite Chile’s economic growth and poverty reduction, the levels of income
inequality have progressively worsened in conjunction with a lack of public
policies aimed at redistributing the country’s wealth. us, what was once con-
sidered ‘the Chilean economic miracle’ (see Congdon ; Petras and Vieux
) has in recent years revealed that the country’s economic growth has
come at the expense of social development, democracy and the environment
(de la Barra ; Duquette ; Kurtz ; Schurman ; Winn ). e
neoliberal utopia dreamed up by the Chicago Boys, implemented by a brutal
military regime and evolving into a flawed democracy, has created a dystopia
in which ‘the social question’ has returned once again to the fore of Chilean
civic society. Having discussed Chile’s (post)authoritarian neoliberal trajectory
and its affects, let us turn to the case of New Zealand, a Pacific Rim country
whose neoliberal turn took place under very different circumstances.
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:
In the very year that Chile came under the grip of the oppressive dictatorship
of Pinochet, an international recession began and New Zealand’s smooth-
sailing welfare consensus began to crumble. Along with the UK joining the
European Common Market in , the global oil crisis of the same year sig-
nalled major changes for the small island nation deep in the South Pacific.
Like elsewhere, New Zealand experienced economic stagnation, high infla-
tion, decreased profitability, low terms of trade, indebtedness, cessation of real
wage growth and growing unemployment (Rudd and Roper ). In this mi-
lieu, many questions were raised about the way things were being done in the
country, including the Keynesian consensus with its policies focused on full
employment and managing inequality.⁵ As Pratt and Clark point out, in these
precarious times ‘the only way to maintain this kind of welfare commitment
was by means of rigorous wage and price controls, overseas borrowing and an
elaborate bureaucratic regulation of everyday life’ (, ).
By the latter half of the twentieth century, New Zealand society had become
more diverse, pluralistic and arguably more individualistic and less conform-
ist and egalitarian. ere were many more white-collar workers, the popu-
lation was overall wealthier, and the lifestyle had changed – cars, television,
the growth of suburbia (Gustafson ). Culturally, this differentiation was
evident in the growth of Māori, anti-racism, women’s, peace, and anti-nuclear
movements. By the late s there was a growing awareness of the impact of
colonisation on Māori, which progressed into a resurgence of the Māori re-
sistance. Māori activists baulked at the historical dispossession of native land
and the resultant disadvantage, marginalisation, and negative representations
of Māori (Fleras and Spoonley ). In sum, the social conservatism and
conformism of the post-war period and the authoritarian populism of Prime
Minister Sir Robert Muldoon’s National era was increasingly challenged, at
precisely the time when neoliberal ideology began playing an increasingly
large role in the changing international climate.
New Zealand’s neoliberal restructuring began in with Fourth Labour
Government ending nine years of National Government rule. Soon aer be-
ing elected, and effectively unannounced, the Labour party ‘abandoned its
traditional constituencies and orthodoxies and pursued a rigorous policy of
economic liberalism and deregulation’ (Pratt and Clark , ), signalling
a free market revolution in terms of pace and scope (Kelsey , ; Graon,
Hazledine, and Buchardt ). From the mid-s, the market became the
Article · Pereda-Perez & Howard
key to a high-achieving society, and individualism and difference become the
watchwords in cultural and political domains (O’Brien and Wilkes ). It is
significant to bear in mind that while neoliberal policies were first introduced
by military dictatorships in developing countries (e.g. Chile, Argentina, Brazil)
and by right wing governments in developed countries (e.g. USA and Britain),
in New Zealand and Australia they were implemented by le wing labour
governments.
What is striking about this is that labour governments have traditionally been
defined by democratic socialist principles based on social welfare and equality.
e constitution of the New Zealand Labour Party, for instance, defines the
following as some of its guiding principles: ‘co-operation rather than competi-
tion’; ‘equal access to all social, economic, cultural, political and legal spheres,
regardless of wealth or social position’; ‘the natural resources of New Zealand
belong to all the people’; ‘the state must ensure a just distribution of wealth
(Labour Party , ). While it is not difficult to find an affinity between neo-
liberalism, military dictatorships and right-wing governments, all being based
essentially on principles of competition, individualism and the lack of social
ethics, in the case of labour governments in both Australia and New Zealand,
the turn to the market represents an extreme contradiction of principles (Con-
nell , –).
Oen known as ‘Rogernomics’ – aer the minister of finance leading the
changes, Sir Roger Douglas – the economic restructuration of New Zealand
sought to reduce debt and pressure on government spending, leaving behind
the priority of full employment that characterised previous administrations.
e Labour Government pursued a set of reforms that included flattening
some personal and company tax rates, selling government companies and
introducing private sector management techniques into the public sector. Re-
moving subsidies, freeing up financial and foreign exchange markets, remov-
ing internal regulations on businesses, lowering protective barriers, and sim-
plifying tariff and tax regulations were further measures adopted to control
inflation and improve choice (James ). In general terms, there was a com-
prehensive shi from the welfare state to a free market economy, with a defla-
tionary strategy, market liberalisation, the redesign of the existing welfare state,
and a move towards a more flexible labour market (Rudd and Roper ).
One result of this restructuring was a massive increase in unemployment and
a widening gap between rich and poor. However, on a broad social and cul-
tural front, the ensuing strife was not completely straightforward. e Labour
Government’s goals and orientation were aimed at liberalising not only New
SITES: New Series · Vol 12 No 1 · 2015
Zealand’s economy, but also society, which was perceived as oppressive and
conservative. In a clear sign of attempting to keep pace with the sociocultural
changes, the Labour Government passed the Bill of Rights, established the
Ministry of Women’s Affairs, and, in response to Māori pressure, increased
the powers of the Waitangi Tribunal and recognized biculturalism through
a variety of reforms. It also passed bills decriminalising homosexuality and
banning nuclear power and nuclear armed ships and aircra (James ). As
Pratt and Clark observe: ‘At this juncture the sense of liberation and new-found
capacity for self-determination rather than state determination was sufficient
to provide Labour with another election victory (with an increased majority)
in ’ (, ).
Despite these progressive measures, the speed of the structural changes in-
troduced by the Labour Government led to significant social discontent. is
was signalled by the establishment in of the New Labour Party under
Jim Anderton, and in the National Party’s electoral victory, as many New
Zealanders felt betrayed and deceived by the ‘hidden political agenda’ of the
Fourth Labour Government’s second term (Nagel ). However, the National
Government pushed on with the reforms in its first term, further cutting social
spending (benefits, health, education) and implementing the controversial
Employment Contracts Act of , which significantly altered labour markets
in favour of employers. e economic effects of these changes were significant,
with of those in work worse off in real terms during the – period
(James ). e radical changes implemented by the neoliberal turn in terms
of restructuring and downsizing the state were unforeseen by a large majority
of New Zealanders and marked a very significant juncture in the country’s
historical trajectory.⁶
In there were growing signs of resistance, and a large voter turnout elected
New Zealand’s Fih Labour Government, led by Prime Minister Helen Clark.
is election indicated a move away from the harder edged neoliberalism of
the Shipley-led, -supported governmental direction of –. In fact,
it can be seen as part of a worldwide turn towards the ird Way (promoted by
Tony Blair in the UK and Bill Clinton in the United States). e ird Way is a
contemporary reworking of social democratic ideals, which through enlight-
ened state intervention attempts to extend citizenship and democracy beyond
the formal political sphere in order to reduce economic and social inequali-
ties. According to ird Way thinking, the market is the only feasible way to
allocate resources, and globalisation is viewed as a positive and/or inescapable
force. However, ird Wayers turn towards civil society (the sphere outside the
state and market), community, and the expansion of democracy as a counter
Article · Pereda-Perez & Howard
force to the domination of society by markets.
Although Clark’s government (–) presided over nearly a decade of
economic growth, lowered unemployment rates, increased the minimum wage
by per cent per year and promoted democracy and human rights at home
and abroad, ’s election of the more conservative National government,
led by Prime Minister John Key, demonstrated contemporary New Zealand’s
preference for neoliberal governance. is occurred despite the fact that since
the implementation of the first neoliberal reforms in , job insecurity, in-
equality, child poverty and home unaffordability have significantly increased
in New Zealand ( b; Wade a). Along with the policy changes
discussed above, some of these social consequences have been employment
casualisation, the growth of part-time work, increased unemployment, and
a less secure labour market (McManus, McLennan, and Spoonley ). e
gap between Māori and non-Māori in health, income, and education has also
increased (Kelsey ; Rashbrooke ).
In the wake of the crisis, the country experienced higher unemploy-
ment and lower wages. is brought down household market income, while at
the same time the government reduced the generosity of the lower-tier social
safety net programmes and made social benefits subject to more stringent job-
search requirements with the stated objective of raising the incentive to work
( c, , ). Additionally, the approved Government Commu
-
nications Security Bureau () amendment bill extended the powers of the
to essentially spy on residents and citizens to assist the police, Security
Intelligence Service and the military with lawful authorization (New Zealand
Parliament ). is bill was highly criticised for its threat to democracy
and the role of the state in mass surveillance in New Zealand (Salmond ).
Beyond its own borders, Edward Snowden leaked papers showing that New
Zealand has been spying on its Pacific Island neighbours and had plans to spy
on China for the United States (Fisher ). Despite all this, the New Zealand
majority maintains its support for John Key’s National government, evidenced
by a third re-election in late . Needless to say, this demonstrates a very dif-
ferent societal attitude to the country’s neoliberal trajectory compared to that
of Chile. One way of accounting for this difference, we suggest, is through the
concepts of authoritarian and post-authoritarian neoliberalism.
- :
Along with their similarities and differences, the two Pacific Rim societies
SITES: New Series · Vol 12 No 1 · 2015
under consideration are unique in many respects. Until the introduction of
neoliberal reforms, New Zealand had not only been one of the most protected
economies in the world, but also had one of the most advanced welfare state
systems of any capitalist democracy (Nagel ). Meanwhile, Chile not only
had the world’s first democratically elected socialist president, but was also
the first country to attempt to move to socialism by peaceful means (Nagy
and Leiva ). Ironically, in New Zealand, the neoliberal reforms were led
by the Labour Party, a le-wing party of the socialist tradition. While this was
not entirely unique to New Zealand, as Australia’s Labour Government also led
the transition to neoliberalism, the pace and radical changes that took place in
New Zealand had no counterpart anywhere else in the developed world (Nagel
). As mentioned, Chile’s neoliberal reforms were unique in the sense that
they were a world first, instituted by a military dictatorship following a
backed coup d’état.
Despite emerging under very different social and political conditions, demo
-
cratic and post-authoritarian neoliberalism share some similarities. In both
Chile and New Zealand, the neoliberal reforms signalled quick and radical
changes to former welfare states and development models. ese reforms were
implemented to stimulate local economies and control inflation, while reduc-
ing the influence of the State on the economy by transferring its control from
the public to the private sector. In both cases, the results were increased vulner-
ability to external shocks in their local economies, inequality, concentration
of wealth and precarisation of the job market (Duggan ; Wacquant and
Steinmetz ; Xue ).
With different degrees of intensity, the implementation of neoliberal policies
allowed New Zealand and Chile to experience economic growth, while at the
same time increasing inequality. is has been particularly extreme in Chile,
where income distribution is dramatically concentrated. For instance, the rich-
est per cent of the population receive per cent of the total income and
the richest per cent gathers . per cent of the total income of the country
between – (López E., Figueroa B. and Gutiérrez C. ). When ad-
justed by the tax information available at the internal revenue service of Chile
the Gini coefficient nearly doubles that of the . average of countries.
Another particularity of Chile’s income inequality is the class structure. Ac-
cording to Espinoza and Barozet (), while the middle class in Chile com-
prises around half of the population ( per cent), in terms of income it is
much closer to the lower class ( per cent) than to the upper class ( per cent).
is proximity reflects two central aspects of Chile’s social structure. First, a
large part of the middle class is in fact ‘lower’ middle class; and second, since
Article · Pereda-Perez & Howard
there has been no social protection aimed at this majority, the middle class is
highly vulnerable to downward mobility when facing any financial difficulty.
In New Zealand, while inequality trends have remained stable since the s,
the level of wealth disparity remains considerably higher than before the im-
plementation of neoliberal reforms in . Until then, New Zealand as the
so-called ‘classless society’ had the lowest income inequality in the world, with
a Gini coefficient of only . ( a). By , however, the Gini coef-
ficient reached ., meaning New Zealand now ranks out of for the
countries and below the average ( c). Looking at New
Zealand’s income distribution, by it displayed high levels of concentration,
with the richest per cent of the population receiving per cent of the total
income, while the poorest per cent receive only per cent (Cheung , ).
A salient feature of income inequality in New Zealand is that it falls dispro-
portionally on children, Māori and Pacific communities (Rashbrooke ).
e central difference between authoritarian and democratic versions of ne-
oliberalism rests once again on how they were implemented and what this
meant for civic society. In both Chile and New Zealand, the logic of economic
growth put forward by neoliberal ideology (based on trade and speculation
rather than production and industrialisation) was alien to their local econo-
mies. However, we argue that some of the values implicit in neoliberalism, like
those of individual freedom and entrepreneurship, found a counterpart in
New Zealand society as it was moving to liberalise and deregulate not only its
economy, but its cultural norms and values.
While Chile had been on the path towards democratic socialism since the
s, the neoliberal turn was intertwined with military fascist rule, which
promoted a culture of intolerance, fear and social divisions (Pino-Ojeda ).
is also brought back the tradition of republican authoritarianism, which pro-
gressive sectors of Chilean society and politics had been attempting to move
beyond. In short, Chile’s reforms meant not only a radical liberalisation of the
country’s economy, but also a dramatic regression of liberal democratic values.
Conservative values, repression and segregation were enforced by the state and
the military on a daily basis, while policies towards free trade and liberalisation
of the market were implemented overnight. e sudden disjuncture in Chile
and other Latin American countries (that fell to military dictatorships at the
time) created profound dissonance in these societies.
By contrast, in New Zealand’s democratic neoliberalism, reforms were accom-
panied by a redefinition of the concept of welfare and state provision. Under-
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pinning this – in theory – was the value of freedom, equality of opportunities,
individual responsibility and the belief that the private sector, the family and
voluntary organisations (instead of the state) play a leading role in welfare
(Turner , ). New Zealand’s neoliberal turn thus involved not only the
liberalisation of the economy, but also a cultural liberalisation. As mentioned,
the neoliberal turn came with progressive social legislation with regards to
issues of gender, ethnicity and sexuality. e election of the Fourth Labour
Government in and re-election in was a sign that the majority of
New Zealand society desired and embraced change (Nagel ).
Despite this seeming cultural shi, it has been observed that with the
Labour election, New Zealanders were unaware of the radical neoliberal re-
forms that would suddenly be imposed. For instance, Challies and Murray
() argue that neoliberal market reforms were implemented without public
consultation by ‘an elected yet undemocratic government’ (), thus mak-
ing New Zealand and Chile essentially synonymous cases, in that both were
subjected to neoliberal coups. is raises the question, however, of how an
elected government acting within its prerogatives could be compared with a
violent military dictatorship with absolute disregard of human rights. Without
underestimating the public resistance or the sense of injustice emanating from
New Zealand’s neoliberal reforms beginning in , it must be remembered
that the process occurred in a fully functional democracy. Although the New
Zealand public re-elected the Labour Party in , this is not to deny the
relatively quick realisation that neoliberal reforms would have many negative
consequences for the majority.
Unlike Chile, there appears to be a growing consensus in New Zealand that
the country should be run first and foremost as a business, consistent with
Harvey’s () notion that neoliberalism is essentially the ‘economisation of
everything’. Social issues in New Zealand, for instance, are increasingly rep-
resented primarily as economic ones and matters of individual responsibility.
is shi can be seen in mainstream media, which presents education, child
poverty, domestic violence, housing and asset sales not so much as moral or
political issues as economic and individual ones.⁷ e pitfalls of such issues
are presented on the grounds of financial costs and economic losses, rather
than social and political accountability. A neoliberal ideology of individual
empowerment and resilience goes along with the individualisation of social
problems (Joseph ; Hall and Lamont , ).
Unlike classical liberalism and the welfare state, which ensured that social
externalities generated by un- or under-regulated economic practices were
Article · Pereda-Perez & Howard
managed or eliminated (Polanyi ), neoliberalism collapses the distinction
between economy and society. As Shamir observes:
Neo-liberalism […] actively exports the logic of the market to other
social domains, extending a model of economic conduct beyond
the economy itself, generalizing it as a principle of action for areas
of life hitherto seen as being either outside or even antagonistic to
the market. (, )
Under neoliberalism, the state essentially becomes an enterprise or an HR
department whose role is to manage and distribute authority to state and
non-state units in an all-encompassing market environment. e growing
legitimacy of neoliberalism in New Zealand has thus gradually de-legitimated
the welfare consensus that defined the country prior to . As Gustafson
(, ) argues, before the neoliberal turn deep divisions of opinion on mat
-
ters such as social security, health and education did not exist. e increasing
economisation and privatisation of society in New Zealand, however, does not
simply demonstrate the country’s recent embrace of neoliberalism. We suggest
that what it shows, rather, is a continuation and intensification of a liberal, in-
dividualistic ethos that was already present in the culture of the early British/
European settlers (Pearson ). us, the classical liberal idea of autonomy,
rooted in the Anglo tradition going as far back as John Locke’s ‘natural contract’
(emphasising the protection of life, liberty and property) has easily adapted to
fit the basic tenets of neoliberalism. In New Zealand, where egalitarianism is
a much celebrated aspect of the culture (Nolan ), a closer look reveals a
society in which everyone is expected to be self-sufficient, with or without gov-
ernment assistance. Under neoliberalism, this ethos evolves into the syndrome
that Foucault () has called the ‘entrepreneur of the self’.
In New Zealand, the general acceptance of neoliberalism and the inequalities
it has brought about continues. is is given by the fact that only per cent
of the country thinks it is the government’s responsibility to reduce income
differences between the rich and the poor, compared to per cent in Chile
( ). Not coincidentally, it is also the richest per cent of the popula-
tion who owns per cent of the country’s wealth, and are largely of British-
European ancestry (Cheung , –). Another element that may help ex-
plain New Zealand’s general political complacency is the country’s high level
of outward migration. As a member of the Commonwealth, New Zealanders
have had greater opportunities for long-term emigration, with nearly a quarter
of the population residing overseas – primarily in Australia and the UK (La-
bour and Immigration Research Centre ). Across the Pacific, the Chilean
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population is relatively immobile, which perhaps also explains the country’s
high levels of political engagement. On the other hand, New Zealand’s so-
called ‘brain drain’ or trans-Tasman exodus is balanced out by inward migra-
tion. Immigrant populations tend to be more politically and economically
marginalised due to the cultural and institutional barriers they face – they also
may not be able to vote. us, between locals leaving and immigrants arriving,
under the backdrop of liberal ideology, New Zealand on the whole remains
politically complacent with its neoliberal trajectory and correlative inequality
(Sibley and Duckitt ).
e liberal Anglo view of society, the individual and governance contrasts
starkly with that of Chile and other Latin American countries that emerge
from a very different set of cultural traditions. Being more collectivist and
paternalistic cultures (Larraín ), society tends to be viewed as a big fam-
ily, of which the state is part. Furthermore, especially since the social move-
ments of , for the majority neoliberalism in Chile displays a clear lack of
legitimacy due not only to widespread inequality but also to the fact that it was
implemented by authoritarian and violent means. Not only was this form of
neoliberalism corrupt from the beginning, but the inequalities it fostered were
not formally addressed aer Chile’s return to democracy in . at being
said, the legitimacy of the neoliberal model maintains strong support by the
ruling class and right wing, most of whom supported Pinochet’s dictatorship.
e second important contrast between the authoritarian and democratic ver-
sions of neoliberalism rests on the ethico-political accountability they engen-
der. In Chile, as neoliberalism was intertwined with fascist and authoritarian
values and a complete disregard for basic human rights, there was no political,
moral or ethical accountability regarding the social consequences of the Chica
-
go Boys’ ‘experiment’. Even aer Chile’s return to formal democracy in , the
notion of human rights and the democratic culture of the country remained
weak. Political institutions from the dictatorship period (e.g. the Constitution,
electoral system and Labour Act) continued to protect the interests of eco-
nomic elites and market autonomy, thus reinforcing and further developing
Chile’s authoritarian neoliberalism. Chilean society remained traumatised by
nearly two decades of oppressive, totalitarian rule, with the phantom of the
dictatorship continuing to haunt the country’s collective consciousness. Nev-
ertheless, under post-authoritarian neoliberalism in Chile and in other Latin
American countries such as Brazil, Argentina, and Uruguay, demands for truer
democracy and political accountability are on the rise (Dello Buono and Bell
Lara ; Isbester and Patroni ; Dunkerley ).
Article · Pereda-Perez & Howard
It is worth noting that marks years since Chile’s return to formal de-
mocracy and the critical mass who initiated the movements were largely born
in the post-dictatorship period. e younger generations in Chile are increas-
ingly politically engaged and seeking to change the neoliberal ‘model’ of so-
ciety they are set to inherit. Along with the demands raised by the student
movements, claims for cultural citizenship have emerged, challenging the legal
and institutional intolerance and discrimination faced by many Chileans (see
Instituto de Estudios Indígenas ; Gaune and Lara ; ; Ortega
et al. ).
Gender minorities, indigenous communities, the working class and communi-
ties outside of the capital, Santiago, have intensified their claims for recognition
and rights. Centralism, conservatism, classism, sexism, racism and intolerance
are at the heart of the inequalities experienced by Chileans. On a national level,
demands for environmental care and preservation have gathered a widespread
support; the dramatic degradation of the environment has severely affected the
health and quality of life of the population. However, air, water and soil pol-
lution have not affected the population evenly; those at the lower levels of the
social pyramid are those who experience the greatest impacts (see Fuenzalida
and Quiroz ; Romero ; Romero et al. ).
is article has been underpinned by the questions: ) Why are contemporary
societal attitudes and responses to neoliberalism more favourable in some
societies than others? ) What do these different attitudes and responses say
about the legitimacy of neoliberalism today? We have argued that when neo-
liberalism is implemented by authoritarian regimes, as in the Chilean and
other former military dictatorships, it actualises a perverse and corrupt form
that in the long run undermines its own foundations, functioning and legiti
-
macy. By contrast, when neoliberalism is implemented democratically, as in
New Zealand, it is driven by both economic and cultural liberalisation. In this
case, critically questioning the legitimacy of neoliberalism is largely out of
public discussion, since its implementation took place within the rule of law
and under the powers and authority of a fully functional democracy. In any
version, neoliberalism has proven to be prone to failure, leading to economic
instability and inequality. While governments’ responses and their account-
ability in the face of economic crises and rising inequality might influence
people’s support of neoliberalism (Bailey and Chapain ), a crucial factor,
we argue, is whether it was implemented under democratic or authoritarian
governments.
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With the passing of time, in New Zealand and other well-established democ-
racies, neoliberalism has debilitated democratic institutions, weakened dem-
ocratic values and increased authoritarian forms of social control and state
surveillance (Wade b; Guarino ; Marsh and Miller ; Wacquant
and Steinmetz ; Wolin ). is is paradoxical when we consider how
neoliberalism was initially reactionary to violence and pro-democracy (Can-
terbury ). As we discussed, New Zealand’s Labour-led neoliberal turn
represents a radical departure from the country’s welfare consensus. A recent
report demonstrates that despite maintaining a positive international image,
New Zealand has actually been regressing in certain respects when it comes
to human rights. e authors cite, for example, child poverty, gender inequality,
high levels of violence against women, the systemic disadvantage of Māori, and
weaknesses in disabled rights (McGregor, Bell, and Wilson ). Furthermore,
Pratt and Clark note that since the s New Zealand has become an increas-
ingly punitive society (, ). e daily average prison population, for
example, increased from around in to around in , making
it second in per capita rates of imprisonment aer the United States.
Despite growing inequality and widening social divisions (Crothers ;
Rashbrooke ), New Zealand has largely shown support or at least com-
plicity with the shi. is, we have suggested, may in part be explained by
a liberal, individualistic ethos based on self-sufficiency inherited from the
culture of British/European settlers. Such an ethos reveals an ‘elective affinity’
with neoliberal ideology, based on private enterprise and minimal govern-
ment intervention. e re-election of Prime Minister John Key – a multi-
millionaire and former businessman – for a third term demonstrates that the
New Zealand majority believes the country should be run first and foremost
as a business. e logic of this business attitude is based on the notion that
profit comes before people and it is the government’s job to allow for economic
growth and to maintain a smooth space for transnational capital to flow in and
out of the country. e government’s role in civil society and the questions of
ethics have little space in this milieu.
e central and most striking difference between Chile and New Zealand is
in the legitimacy and support of neoliberalism. Democratic neoliberalism
remains allied to its principles and orthodoxy (Macdonald and Ruckert ;
Howard and King ; Duménil ), whereas post-authoritarian neolib-
eralism is becoming increasingly critical of its own foundations and validity
(Dello Buono and Bell Lara ; Dunkerley ; Macdonald and Ruckert
). e failure of neoliberalism in the developed world has led citizens of
emergent economies and developing countries to become critically aware of
Article · Pereda-Perez & Howard
the impact of neoliberalism and globalisation on their local economies, institu-
tions and development. Meanwhile, in the developed world, the aermath of
the financial crisis still has the major economies trying to explain and/or
cover up what went wrong (Duménil ; Overbeek and van Apeldoorn ).
While there has been greater critical awareness and dissent, demonstrated by
‘Occupy’ and other social movements and protests, these seem to have had
little systemic impact. Somewhat ironically, Chile, home of the world’s first
major neoliberal experiment, is the only country in the world where social
movements and protests have been heard. For example, former leaders of the
student and environmental movements were elected into the government
and congress in December , several representing the Communist Party. By
this and recent reforms, namely the electoral system in and a forthcoming
new constitution, Chile has thus made the strongest statement against neolib-
eralism to date, with other Latin American countries such as Argentina, Brazil,
Colombia, Nicaragua following suit.
Today’s widespread public dissent, evidenced by the student movement and
the domino effect it created, are inextricably related to the inequality, symbolic
violence and social suffering that characterises Chilean society. Unlike New
Zealand, the majority of Chileans are calling for an end to the exploits of the
neoliberal model, which once again was imposed by force and thus never le-
gitimate. By tracing the neoliberal trajectories of Chile and New Zealand, two
southern Pacific Rim countries, and establishing the similarities and differ-
ences between authoritarian and democratic neoliberalism, we have aimed to
shed light on the legitimacy and societal attitudes towards neoliberalism today.
Written from the South about the South, we hope our contribution will gener-
ate new critical dialogues about neoliberalism in the Pacific Rim and beyond.
is model imposed norms that come from modes of production and produc-
tive forces that were more efficient onto developing economies that were still
based largely on small, rural producers. All agents were regarded as equal in
the global market, despite developing countries not being equally prepared
and equipped, both culturally and economically. is argument, put forward
by Pierre Bourdieu in in Firing Back: Against the Tyranny of the Market,
remains current.
e Chicago Boys refers to a group of Chilean economists from the Pontifical
Catholic University of Chile and University of Chile that were mostly trained at
the Department of Economics of the University of Chicago under Milton Fried-
SITES: New Series · Vol 12 No 1 · 2015
man and Arnold Harberger in the s and s. e Chicago Boys firmly ad-
hered to free market policies such as privatisation and deregulation; they became
known as they designed and implemented the first neoliberal reforms in Chile
during Pinochet´s dictatorship in the s (see Delano & Translaviña ).
e economic policies of Allende´s government were largely based on a strat-
egy that revolved around four fundamental axes: the redistribution of income,
the expansion of government programmes and services, state control over key
industries and the expansion of agrarian reform. Allende’s ultimate goal was to
transform class relations and private property, and to institute a new economic
framework based on socialist principles (Valenzuela , ).
While several initiatives have been put forward to change the electoral system
and constitution since the return to democracy in , it was only in that
the Congress approved the change from the binomial to a proportional electoral
system, which will come into force in . (See Electoral Law no. ., ).
In addition, pressures for a new Constitution are on the rise; a number of civilian
organisations and social movements are calling for a referendum for a new con-
stitution, in what has been termed el Movimiento por la Asamblea Constituyente
e movement for the Constituent Assembly.
Arguing for extensive state intervention in the economic sphere and increase
of the money supply to stimulate the economy, the government intervened to
protect local industry and agriculture and to balance the competing interests of
farmers, manufacturers, employers, and unions (Gustafson, ). e Keynes-
ian period saw a rate of unemployment that never exceeded of the work-
force (Rudd & Roper ), and class struggle seemed, for many, a distant thing
(Wilkes ). is period also saw the rise of the middle class, with an expanded
managerial and bureaucratic stratum that followed increased government and
business size (Wilkes ). New Zealand’s identity in this time, say Fleras and
Spoonley (, ), relied on consensus on improved living standards for the
mass of people, anti-communism, a consensus politics of the welfare state and
the unquestioned superiority of Pākehā values.
is had been characterised by a state that had had a central role from early
colonisation in establishing infrastructure and providing security, and then as
a key player in the ‘historic compromise’ and the achievement of the much-
vaunted ‘classless society’ (O’Brien and Wilkes ). Government commitments
to regional development, social welfare and universal provision of core public
services, such as health and education, had shaped the structure and values of
the society (Kelsey , ).
Article · Pereda-Perez & Howard
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ten years. e story, like many others, exclusively details the economic implica-
tions of the issue, such as the annual costs of treating victims, survivor support
and loss of productivity. See http://tvnz.co.nz/national-news/domestic-violence-
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