Juan Laborda – Chile, the Beginning of the End of Neo-liberalism

Yes, Chile is very far from Europe, but this has to do with something very big. We are seeing repeated tremors,  ever stronger, in reaction to neo-liberalism.

Juan Laborda teaches Financial Economics at the University of Carlos III and Money and Banking, Syracuse University (Madrid)

Originally published in Spanish at vozpopuli

Translated and edited by BRAVE NEW EUROPE


The oasis, the model, the example, the miracle… That was Chile, that was what the mainstream media sold us. Smoke and mirrors, pure smoke and mirrors! From the oasis to massive state violence, without a transition phase. Once again the Chilean army and the carabineros shooting to kill their fellow citizens. A return to Pinochetism, pure dystopia. Of the current president, it is better not to mention the bastard, he does not even deserve we mention his name. And it all goes back to that fateful day, September 11, 1973, when some cowards took up arms against the democratically elected government, the government of a good man, Salvador Allende, who died standing proud. They wanted to end the path of democratic socialism – not to be confused with social democracy. In order to do so, they counted on the participation of the United States, the Fubelt or Track II project, hand in hand with that toxic individual, Henry Kissinger. By the way, now the Americans accommodate Chinese socialism, which they themselves, guided by a deep egoism and a certain air of superiority, helped to engender. It was a small man they had to deal with, but a hundred thousand times more intelligent than all of them put together. I mean Deng Xiaoping.

Salvador Allende, murdered by traitors and cowards This was supposed to provide a lesson to the rest of the world. How? By cementing and praising a dystopia called Chile, made neo-liberal through the Shock Theory. Because Chile is undoubtedly the example always put on the table by all the gurus and economists based in foundations, generously irrigated with private money, destined to proclaim the benefits of a system of governance, now broken, called Neoliberalism. In the Andean country, it is synthesized in a basic idea, to privatise everything or almost everything from education, through pension systems, health, ending in those facets that affect the daily life of citizens. All in the name of efficiency. False, in the name of a process of accumulation of income and wealth, of a neo-feudalism. In these models, the role of the State is reduced to the police, the army, a justice system, all of them destined to maintain the private property of the 1%, of the superclass.

And do you know what this system has generated? What is Chile really? It’s almost 40 years of cuts in everything: health, pensions, education, seasoned with continued increases in the prices of electricity, petrol, food, housing… The mix is explosive. Chile being one of the nations with the highest per capita incomes in Latin America, its salaries are miserable, like those of Paraguay; its prices are comparable to those of Spain; and inequality, one of the highest in the world. Forty percent of income goes to the richest 1%, whose tax treatment is also very favourable. But when the majority of the population no longer has anything to lose, and, above all, when they laugh in the face of authority, revolt breaks out. From oasis to “war”.

Chile and Neo-liberalism: Dismantling Their Theoretical Basis

The lesson we must learn from Chile is that the evidence piles up against the theoretical basis of neoliberalism, against that farce called Chile. I have already written of all this ad infinitum. It is urgent to go on the offensive, to dismantle and put an end to each and every one of the theories and structures that, in addition to increasing the inefficiency of the economy, have generated the greatest accumulation and concentration of wealth in recent history. If this is not done, it will become clear that the underlying problem is not economic incompetence, but also economic incompetence. No! The dilemma is another, to perpetuate a neo-feudalism, based on class instinct, where the powerful amass their wealth because, according to them, they deserve it. And they don’t want to give up an ounce of their current privilege.

Following the Great Depression they were luckier than we are nowadays, because there was a wide range of economists – Michal Kalecki, Joan Robinson, Nicholas Kaldor, Piero Sraffa, John Maynard Keynes… – who academically destroyed the dominant orthodoxy and the monetarist alternative, led by Friedrich Hayek. They used their knowledge to change the course of history. But again there are those who tried to rewrite it. Hayek’s ideas were rescued from the cemetery of ideas in the mid-1970s by powerful private foundations, clearly conservative, but this time hand in hand with credible institutions, specifically “academia” that “contributed” Milton Friedman and the Chicago school, undoubtedly one of the blackest episodes in the history of economic theory. We must be clear, as George Blackford maintains, in “Economists Should Stop Defending Milton Friedman’s Pseudo-science”, all the theory and methodology of Milton Friedman and the Chicago boys, which nourishes Chile, is simply pseudo science of a purely ideological nature. And that has been Chile for the last 40 years, an ideological lie. Allow me a brief anecdote. The Chilean armed forces don’t have private pensions, but a pay-as-you-go system similar to ours. And to finish off the coherence of the Chilean system, these same armed forces receive, without having to justify anything, 10% of the income of the state copper company, nationalized at the time by Salvador Allende, and which was not privatized. All this is very coherent, isn’t it? As one follower of this blog says, “neoliberalism must die where it was born”.

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