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Democratic Socialism in Chile and Peru: Revisiting the “Chicago Boys” as the Origin of Neoliberalism

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Abstract

In the 1950s and 1960s, the U.S. government paid the economics department at the University of Chicago, known for its advocacy of free markets and monetarism, to train Chilean graduate students. These students became known as the “Chicago Boys,” who implemented the first and most famous neoliberal experiment in Chile after 1973. Peruvian, Mexican, and other Latin American economics students followed a similar path and advocated a turn to neoliberal policies in their own countries. The Chicago Boys narrative has become an origin story for global neoliberalism. However, the focus on this narrative has obscured other transnational networks whose ideas possess certain superficial, but misleading, similarities with neoliberalism. I examine Chilean and Peruvian engagements with Yugoslavia's unique form of socialism, its worker self-management socialism, which was part of a worldwide discussion of anti-authoritarian socialism. I first introduce the Yugoslav socialist model that inspired those in Chile and Peru. I then examine socialist discussions in Chile and Peru that called for decentralized, democratic socialism and looked to Yugoslavia for advice. I conclude by examining the 1990s postponement of socialism in the name of a very narrow democracy and realization of neoliberalism. The Chicago Boys story assumes the easy global victory of neoliberalism and erases what was at stake in the 1988–1994 period: radically democratic socialism on a global scale. For text: https://d101vc9winf8ln.cloudfront.net/documents/31681/original/Bockman_CSSH_2019.pdf?1561725989

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This article aims to assess the role of neoliberal ideas in shaping Russia's transition to a market economy. Prevailing ideas of the Washington Consensus undoubtedly encouraged Russia's leaders to embrace radical reforms, but Russia's reformers were not blindly following an ideological agenda set for them in Washington, DC. The actual policies that were implemented diverged considerably from the prevailing neoliberal orthodoxy and were heavily shaped by the self-interest of the elites who were making the policy decisions. While prices were freed and international trade and currency flows opened up, an insider-dominated privatization process left the Russian economy in the hands of a narrow circle of oligarchs. Russia's corrupt, oil-dependent and state-centered economy is far removed from the decentralized, competitive market system that the reformers had envisaged. Democracy, which was initially seen as integral to the transition process, also fell by the wayside. While critics argue that Russia suffered from an overdose of ‘market fundamentalism’, neoliberals themselves still insist that Russia did not go far enough in unleashing genuine market forces. Either way, Russia has now joined the global market economy, while at the same time preserving many of the institutional features that are the product of its unique geography and historical heritage.
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This article provides a new synthesis on the origins of self-management in Yugoslavia on the basis of new archival research. It rejects the dominant view in the historiography that self-management arose merely as an ideological justification for the split with Stalin's USSR in 1948. Rather, it demonstrates that the introduction of workers' councils was part of an elaborate effort on the part of the Communist leadership to return to its pre-1948, proto-‘reform Communist’ strategy that was remarkably open to interaction with the world market. This is shown to have implications for understanding Yugoslavia, Eastern Europe, the Cold War and Communism.
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Five years ago the Comintern loomed once again as a spectre on the European horizon with the founding in Poland, September 1947, of the Information Bureau of the Communist Parties of the USSR, Bulgaria, Hungary, Rumania, Poland, Czechoslovakia, Yugoslavia (expelled June 1948), France, and Italy. It has since become both fashionable and convenient to identify the “Cominform” with all aspects of international Communist activity, ranging from the most general of policy directives to an isolated Communist-led strike. The indiscriminate identification of “Cominform” with international Communist activity provides the layman with a convenient stereotype which spares him the trouble of further inquiry. For the student of Communism, however, this lack of precision merely results in obscuring the actual role of the Cominform, as it is known to us, and more particularly, its function within the configuration of various covert and overt instrumentalities of the international Communist movement. To speak, for example, of a “Cominform” policy of collectivization or of a “Cominform” purge trial in the Balkans, or to suggest by “Cominform” the whole web of controls of national Communist parties maintained by the USSR is to ascribe a role and importance to the Cominform that it simply does not have. For without minimizing the importance of the function the Cominform has come to discharge, it may be said that its role is essentially that of a central, but by no means the most important, propaganda instrument of the international Communist movement, designed primarily to provide public guidance and information to the leadership of various national Communist parties. Thus Pravda and the USSR radio broadcasts furnish daily guidance to the international Communist movement, and the World Federation of Trade Unions is continuously engaged in attempting to bring trade union activity in line with Communist policy.
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Forced exile was important to Chilean politics both during the military regime and after the dictatorship's end in 1990. Exile was central to Pinochet's strategy for eliminating the left in Chile and consolidating and retaining absolute political power. At the same time, exile kept the opposition alive when the left was decimated in Chile, as exiles reconstituted their parties abroad and fought the dictatorship from the “external front.” Exiles' return in the mid-1980s contributed to the success of the opposition effort to defeat Pinochet in the 1988 plebiscite. Finally, the exile experience was central to the reconfiguration of Chilean politics, particularly the “renovation” of the Socialists, which led to the breakup of the long-standing Socialist-Communist alliance and the formation of the Socialist—Christian Democrat alliance, the core of the Concertación de Partidos por la Democracia, which has elected presidents and majorities in the Chamber of Deputies in each election since 1989.
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It is common knowledge that, prior to the military coup of 1973, Chile was the only Latin American country to have strong workers' political parties of the European type. Many reasons have been given for this phenomenon, but it is clear that Chile has been the only country in Latin-America to allow the development of Marxist parties with strong appeal and a strong following, within the framework of what could be called liberal, democratic processes. Up to 1970, the electoral force of the Socialist and Communist Parties in Chile oscillated between 20 and 30 per cent of the total national electorate. This rose to more than 40 per cent during 1975.
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This article has two main objectives. First, to identify the main political and economic factors which permitted to so-called "Chicago boys' to play a strategic role during the military government. This group of young neoliberal technocrats became the designers and executors of the economic policy applied during the Pinochet period. They also decisively contributed to the formulation of the official ideological discourse. The second objective is to stress the fact that although the era of the Chicago boys is over, the "technocratisation of politics' associated with them has become a permanent new feature in Chilean politics. The new democratic government of Patricio Aylwin is characterised by a marked technocratic orientation. Like the Chicago boys during the military government, a new group of technocrats, the so-called "CIEPLAN monks', has emerged as the most powerful strategic group inside the democratic government. -from Author
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A century after the publication of Max Weber's The Protestant Ethic and the "Spirit" of Capitalism, a major new work examines network-based organization, employee autonomy and post-Fordist horizontal work structures.
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Este libro aborda el tema de las políticas económicas neoliberales que se han venido aplicando en los últimos años en América Latina. Este fenómeno consiste en la combinación de enfoques monetarios de estabilización económica, con concepciones liberales en lo que concierne a la organización de la economía y la sociedad.
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Neo-liberalism is an oft-invoked but ill-defined concept in the social sciences. This article conceptualizes neo-liberalism as a sui generis ideological system born of struggle and collaboration in three worlds: intellectual, bureaucratic and political. Emphasizing neo-liberalism's third ‘face’, it argues that a failure to grasp neo-liberalism as a political form imposes two limitations on understanding its effects: (i) fostering an implicit assumption that European political elites are ‘naturally’ opposed to the implementation of neo-liberal policies; and (ii) tending to pre-empt inquiry into an unsettling fact—namely, that the most effective advocates of policies understood as neo-liberal in Western Europe (and beyond) have often been elites who are sympathetic to, or are representatives of, the left and centre-left. Given that social democratic politics were uniquely powerful in Western Europe for much of the post-war period, neo-liberalism within the mainstream parties of the European left deserves particular attention.
Los Chicago Boys y el modelo economico chileno
  • Meller
Genealogia de una Ruptura: El Proceso de la Renovacion Socialista en Chile
  • Atlagich
See Fernando Alvear Atlagich, "Genealogia de una Ruptura: El Proceso de la Renovacion Socialista en Chile," Revista de Ciencias Sociales 36 (2016): 7-34;
El Modelo Neoliberal Chileno y su Implantación
  • Tironi
Ernesto Tironi, "El Modelo Neoliberal Chileno y su Implantación," Documentos de Trabajo 1 (1982).
Peru: A Nation in Crisis
  • Farnsworth
Elizabeth Farnsworth, "Peru: A Nation in Crisis," World Policy Journal 5 (1988): 725-46;
Yugoslavia and Technical Cooperation
  • Bogavac
Economists from Nationalism to Neoliberalism; citation_author=Babb
  • Mexico
Bockman, Markets; Valdés, Pinochet's Economists, ch. 3, esp. 62, 73; Léon Walras, Études d' économie sociale (F. Rouge, Libraire-Éditeur, 1896), 144. 16 For example, see Pierre Bourdieu and Gunter Grass
socialism. Bockman, Markets; Valdés, Pinochet's Economists, ch. 3, esp. 62, 73; Léon Walras, Études d' économie sociale (F. Rouge, Libraire-Éditeur, 1896), 144. 16 For example, see Pierre Bourdieu and Gunter Grass, "The 'Progressive' Restoration," New Left Review 14 (2002): 63-77;
399-401. 17 Existing socialisms and capitalisms, and critiques of each, shape existing neoliberalisms
  • Silva
Silva, "Technocrats," 399-401. 17 Existing socialisms and capitalisms, and critiques of each, shape existing neoliberalisms.
While some political factions supported the use of markets for socialism, others did not. Darko Suvin criticizes extensive market reforms for their anti-communist consequences
Jun 2019 at 12:22:50, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. Downloaded from https://www.cambridge.org/core. Department of History and Art History George Mason University, on 20 Quoted in Benjamin Ward, "The Firm in Illyria," American Economic Review 48, 4 (1958): 566-89, 569. While some political factions supported the use of markets for socialism, others did not. Darko Suvin criticizes extensive market reforms for their anti-communist consequences, in Splendour, Misery, and Possibilities: An X-Ray of Socialist Yugoslavia (Brill, 2016).
The Yugoslav Experiment
  • I Dennison
  • Rusinow
Dennison I. Rusinow, The Yugoslav Experiment, 1948-1974 (University of California Press, 1977), 138.
61 Yugoslavia began to seek diplomatic relations with Peru in September 1956. Archives of Serbia and Montenegro, fond 142, 41 (Materijali komisije za medjunarodne veze)
  • T Peter
  • Knight
Jun 2019 at 12:22:50, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. Downloaded from https://www.cambridge.org/core. Department of History and Art History George Mason University, on 60 Peter T. Knight, "New Forms of Economic Organization in Peru: Towards Workers' SelfManagement," in Abraham F. Lowenthal, ed., The Peruvian Experiment: Continuity and Change under Military Rule (Princeton University Press, 1975), 356-58. 61 Yugoslavia began to seek diplomatic relations with Peru in September 1956. Archives of Serbia and Montenegro, fond 142, 41 (Materijali komisije za medjunarodne veze), 1951, 1955-1957, 1959, "Bilateralni odnosi sa Peruon," 22 June 1959. Victor Raul Haya de la Torre rejected the Third International in 1927, which might explain his interest in Yugoslavia (Klarén, Peru, 260).
Rodríguez told the Yugoslavs that four more Peruvian representatives would soon visit Yugoslavia from Vienna. Archives of Serbia and Montenegro, fond 142, 41 (Materijali komisije za medjunarodne veze)
Rodríguez told the Yugoslavs that four more Peruvian representatives would soon visit Yugoslavia from Vienna. Archives of Serbia and Montenegro, fond 142, 41 (Materijali komisije za medjunarodne veze), 1951, 1955-1957, 1959, "Zabeleska," 1 Aug. 1959.