Paul Johnson en Modern Times: The World from the Twenties to the Nineties
In the mid-1960s, Christian Democrat Chile, under President Eduardo Frei, was regarded by the United States as the best hope, along with Romulo Bentacourt's Venezuela, for Kennedy's Alliance for Progress. But Chile had chronic inflation: about 20 per cent a year in the late 1950s, 26.6 per cent in 1968, 32.5 per cent in 1970. Virtually the sole caouse was government overspending and money-printing. In the 1970 elections, the reforming socialist Salvador Allende, at his fourth attempt, at last won the presidency because of a split in the anti-socialist vote, which nevertheless got 62 per cent combined against Allende's 36.2. The new president had a mandate for nothing, and, on Thomas Jefferson's principle that great innovations should not rest on narrow majorities, he should have concentrated on good housekeeping.
But Allende was a weak man with a divided, part-revolutionary following, which quickly slipped from his control. While he embarked on a programme of wholesale nationalization, which isolated Chile from the world trading community, the militants of his Left wing were not prepared to accept any of the restraints of constitutionalism. They launched "People's Power", consisting of Peasant Councils which seized farms in the countryside and Workers' Assemblies which occupied factories. The strategy was Leninist - "The taks of the moment", said the Socialist Party, "is to destroy parliament" - but the real parallel was with Spain in 1936, where the divisions on the Left and the drift to violence produced Civil War. Allende was caught in a nutcracker with his revolutionaries forming one arm and the other constitued by an increasingly outraged middle class, with the army, originally reluctant to intervene, gradually politicized by the collapse of order.
At the time Allende took over, in January 1971, inflation had actually fallen to about 23 per cent. Within months it was hyperinflation. In 1972 it was 163 per cent. In the summer of 1973 it reached 190 per cent, by fat the highest in the world. This was before the quadrupling of oil prices: the Allende inflation was entirely his own doing. In November 1971 Chile declared a unilateral moratorium on its foreign debts (i.e., went bankrupt). The banks cut off credit; capital fled; with the farms in chaos, producing little, the factories occupied, producing less, exports vanished, imports soared, then vanished too as the money ran out. The shops emptied. The middle class started to strike. The workers, finding their wages cut in real terms, struck too. The official price structure became irrational and then irrelevant as the black market too over. The Left began to smuggle in arms in July 1971 and began serious political violence in May the next year. They had in fact more weapons (30.000) than the army, which numbered only 26.000 men plus 25.000 armed police. Allende oscillated between ordering the police fo fight the Far Left and accusing the army of plotting a coup. But he also countenanced a plan to arm Leftist guerrillas and on 4 September 1973 permitted a demonstration by 750.000 on the anniversary of the elections. A week later his own appointment, General Augusto Pinochet, led a united coup by all three armed forces. Chile had hitherto had an exceptcionally good record by Latin American standards, for constitutionalism and stability. The coup was by no means bloodless. Allende was killed or committed suicide, and the official body-count at the Santiago morgue was 2.796. Most of the resistance came from non-Chilean political refugees, of whom there were 13.000 in Santiago at the time. The failure of the workers occupying factories, or the peasants on seized farms, or even of the armed "revolutionary bands" to fight seriously, suggests that the Far Left commanded little enthusiasm.
The opposition to Pinochet, though noisy, came chiefly from abroad, at least at the beginning of his rule. It was cleverly orchestrated from Moscow, though in fact Soviet Russia had flatly refused to bail Allende out with credits: he was more use to them dead than alive. Thought foreign criticism concentrated on the repressive aspect of Pinochet's military regime, the more important one was the decision to reverse the growth of the public sector, which Allende had merely accelerated, and open the economy to market forces, on the lines of the other Pacific economies. It was notable that virtually all the Pacific enterprise states, except Japan, had been accused at one time or another of running repressive regimes. But the degree to which the state was representative and elected was only one issue; equally important was the extent of national life it controlled. That was why, living as he did in a laissez-faire, minimalist state, Dr Samuel Johnson was able to declare with conviction: "I would not give half a ginnea to live under one form of government rather than another. It is of no moment in the happiness of an individual". Market economics by definition involved a withdrawal by the state from a huge area of decision-making, which was left to the individual. Economic and political liberty were inseparably linked. Freedom of the market inevitably let to erosion of political restrains: that was the lesson of Thailand, Taiwan and South Korea.
The lesson applied equally to Chile. The disaster of 1973 produced complete political and economic breakdown. The reconstruction of the economy had to begin against a brackground of world recession. The merit of the regime was that it was able to reverse a course of government-led inflation that had persisted for many decades and become part of the structure of the Chilean economy. This was painful and unpopular and led initially to a falling GNP and high unemployment. But it allowed the economy to be refloated on a market basis with the help of IMF loans. During the later 1970s, with inflation at last under control, growth was resumed and by the beginning of 1980 the World Bank was able to report: "Under extra-ordinarly unfavourable circumstances, the Chilean authorities have engineered an economic turnaround without precedent in the history of Chile". The economic improvement explained why, on 11 September 1980, a referendum showed 69.14 per cent of those Chileans who voted favouring an eight-year extension of Pinochet's term. But as the 1980s progressed, economic freedom led to ever-increasing demands for politicial freedom. Pinochet was unwilling to grant it. In June 1983, there was nationwide rioting against the regime; two months later the government admitted that seventeen people had been killed in demonstrations. The victims of Pinochet's political police, the Dina, were far more numerous. An official report, commissioned after democracy was restored, calculated that during the sixteen years of Pinochet's rule, 1973-89, 1068 people had been filled by the Dina or people working for them; a further 957 had "disappeared". But fear of the Dina did not deter Chileans from following the logic of a free economy and pressing for a return to full voting rights. Pinochet agreed to hold another referendum on his presidency, and on 14 December 1989, the opposition candidate, Patricio Aylwin, won the presidential election with 52.4 per cent of the votes, bringing the dictatorship to an end, though Pinochet himself remained commander of the army. Aylwin not only commissioned the repot into the regime's excesses, he also set up a permanent foundation in March 1991 to investigate the fate of its victims case by case. But heas careful to continue, on the whole, the regime's well-tried economic policies.
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