ALGERIA / CHILE A Chilean miracle? THE TIME when the Latin American bourgeoisies were prone to nationalist outbursts — at least in the economic field - is past. The Economic Commission of the United Nations for Latin America (CEPAL) no longer seeks the causes of the ills afflicting the sub-continent (where the income per inhabitant has fallen by 8% in ten years) in unequal exchange or the debt. Now, ultra-liberalism is in fashion, and, in line with the United
States, all hope is placed in IMF-dictated adjustments. The
Chilean "miracle" is the example to be followed. In the article below, Pedro Vuskovic, who was Minister of the Economy under the Allende government of 1970-73, examines the CEPAL's analysis of the Chilean development.
### PEDRO VUSKOVIC
HE SUMMARY of the preliminary balance-sheet of the Latin American economy prepared by the CEPAL secretariat reinforces the image of the success of the "Chilean economic model" • an exception in Latin America. CEPAL is taking on a heavy responsibility in supporting, clearly or implicitly, an economic policy which has certainly produced good results in recent years. The report does not analyze the situation with the technical rigour that one would expect from a body of this type, but it does give the opportunity to open a debate on the missing or under-estimated dimensions of the "Chilean model" — their effects over a longer period of time and their consequences for different social layers. The idealized image of the "Chilean model" is widely accepted. This is not only because the model has benefited the privileged layers of Chilean society, but because it has also been taken up by many who once attempted to come up with alternative programmes to those of the dictatorship. This latter category also includes the timid (because uncomfortable) position now adopted by a number of representatives of traditional left-wing positions. All these sectors have come together to agree that the new civilian government must remain in the economic framework established under the Pinochet regime. It is not by chance that the authoritative Chilean daily El Mercurio put the CEPAL report on its front page and, in its economic supplement of December 23, 1989, affirmed that: "although there are important differences between the programme of Patricio Aylwin and that which would have been applied if Hernan Buchi [the candidate of the dictatorship, beaten in the elections] had won, it is clear, on the other hand, that the economic fundamentals were not at issue."
However, it is too soon to close the subject, especially given the implications of the Chilean model for other Latin American countries, on which it will have not only economic, but important social and political consequences.
There are three points which need to be discussed: firstly a genuinely objective evaluation of the economic policies of the military dictatorship; secondly, what, if anything, is original in the "Chilean model" in comparison with other recent Latin American experiences; and finally the degree to which the economic policy implies definite social consequences and political measures.
Let us look at some statistical examples. In recent years, the Gross Domestic Product (GDP) has grown above all in relation to the low point reached by the region's economies. The unemployment rate has declined and there has been a recovery in investment. Inflation has stayed relatively low, exports have evolved in a favourable manner and the external debt has been reduced.
It is possible to have certain reservations about the reliability, in statistical terms, of these indicators. We well know, for example, what the criteria used in official statistics about (un)employment or poverty are worth, or the sort of manipulation that price indexes are subject to.
But independently of that, an analysis of the evolution of the Chilean economy over the last decades requires a longer perspective. We then see that the objective situation of Chile has gone backwards with respect to all the projections and proposals for national development. In fact, the Chilean economy today generates a product per inhabitant which is only slightly higher than in the Allende 23 epoch at the start of the 1970s. The July 16, 1990 • #189 International Viewpoint
CHILE weight of Chile in Latin American industrial production is not only no better than in the 70s, but represents hardly a half of that in 1972. Parallel to this our dependence on outside has been enormously increased, starting with the moment when the key sectors of the national economy passed into the control of the big multinationals.
In recent years unemployment has noticeably fallen. But in 1989, the Programme for Labour Economy of the Academy of Christian Humanism contradicted the official figure of 7.9% provided to please the dictator. According to the report, real unemployment was 16.6% in the capital — 21% for women and 25.7% for youth from 15 to 24 years old. While some sectors have been modernized, the "informal sector" continues to provide 30% of the jobs in Santiago.
Inflation is moderate, but its effect on real wages is disastrous. In the course of 1989, "the improvement in the employment situation has not been passed on to wages....Real wages began to decline in July. At the end of the third quarter, the general index of pay, according to the National Institute of Statistics, was 0.2% down on the previous year."
Agriculture has been orientated externally, and has contributed to the growth and diversification of exports. But, at the same time, the agricultural surface area devoted to production of food for the home market has diminished, and there has been a sharp deterioration in the nutritional standards of the Chilean population.
The foreign debt has declined, but the reduction is due to the conversion of debts into direct foreign investments — in other words by the transfer of national assets. This increases our external dependence, and, tomorrow, the profits of these enterprises will leave the country just as if we were paying interest on the debt.
The attempt to present Chile as a -singular and contradictory — case apart in a Latin America in generalized crisis, and as a model that the other countries should follow, lacks historical perspective. In fact Chile continues to experience a crisis similar to that in other Latin American societies, and follows in practice policies of the same kind as most countries in the continent - policies based on the same "neo-liberalism" inspired and controlled by the International Monetary Fund.
In Chile also, the idealization of the market, the demonization of the state, privatization at whatever price, the priority given to any activity which may lead to increased exports and attacks on, and resistance to, social rights and demands are the means for preserving "macroeconomic equilibria"
The Chilean economy has the same characteristics as the other countries in the region, without any original features. The question is why this same conception of economic policy, basically imposed from outside, has resulted in successes from the point of view of overall growth and financial stability in recent years in Chile, while it has not had this effect in the rest of the Southern Cone.
The explanation of this phenomenon probably lies in the dictatorship's "politi-
The other side of the coin
THE economic results from Chile show that, after the deep crisis of 1982-83, the country has entered into a phase of solid and stable economic recovery, It is not possible, however, to speak of the "success of the Chilean model" without taking Into account Its social consequences. In this sphere, the figures show the price that the least fortunate sections of the Chilean population have paid for the growth.
While Chile's competitiveness on the world market has grown In recent years, this is not due to an Improvement in the competitiveness of the enterprises - which fell by 10% between 1982 and 1987 - but to the devaluation of the exchange rate of the Chilean currency. The other side of such a devaluation is a corresponding fall In the Income of wage-earners. Real wages are today lower than before the 1982-83 cri-
Isis.
The cake has been redistributed to the detriment of the poor, Accord-
Ing to an Inquiry conducted in Santlago, in June 1988 a third of the workers receive less than 560 and two thirds about $120 per month. The average monthly wage Is 5160
More than 50% of the population has a family income of less than 41,470 pesos (some 5166) and lives below the poverty line - fixed by the CEPAL at 44,320 pesos ($177), In 1988 the average wage was 15% below Its 1970 level. The minimum wage, currently set at 547, lost 30% of its real value between 1981 and 1989.
Another significant fact — spending on public services (health, education, housing) has not stopped falling since 1981. Family benefits have been considerably decreased, along with spending on educa24 tlon.* International Viewpoint #189 • July 16, 1990 cal" capacity to impose these programmes in a very radical fashion and make large layers of the population take the consequences, through repression -even if the discontent shows through at the electoral level.
Modernization of limited economic sectors
In Chile, the modernization effort has been concentrated on a part of the economy, and has benefited a part of society. while the rest of the population has been impoverished and pushed to the sidelines, by a strategy of economic and social segregation. This is why the famous figures of success can only be analyzed with regard to the serious deterioration in the living conditions of large layers of the population and the framework of regressive tendencies in the redistribution of profits. The potentially inflationary effects of the excessive income gains of some sectors of the population are combatted by reductions in real wages. It is the workers who are paying for the "economic stability".
This is a very serious question and it cannot be resolved by CEPAL's commentary, which simply invites us to note "the negative aspect" of the "contradictory effects of growth" and the need to correct "some obvious defects". . The real challenge is for Chilean society to confront the inequalities and injustices inherited from the programmes applied under Pinochet. Not to do this is to risk ignoring the aspirations for democracy and unity of the great majority of Chileans.
Today, it is not adequate to keep the main lines of the previous economic policy because of some positive results. It must be recognized that these political programmes have been a source for the constant reproduction of inequality and poverty. The question must at least be asked of how to maintain growth and stability in an alternative framework, which would not inevitably involve marginalization on the one hand and concentrations of wealth on the other.
Neither the advice of CEPAL according to which it would be possible to pursue "good economic conduct" while correcting "some obvious defects", nor the programmatic notion of "more solidarity with the poor" are enough to change the situation.
Such questions — as has been seen in the election campaign — take on a particular significance with the arrival of a civilian government and the hopes for the democratic reconstruction of Chilean society. Other Latin American experiences have shown us that certain basic conceptions of political economy near to that of the Chilean model quoted are far from favouring an economic policy conducive to democracy. *