The Chile Myth

"... contrary to the standard view, which has framed the “Chilean Miracle” as a triumph of the neoliberal economic policies and reforms first implemented under the military dictatorship of Augusto Pinochet (1973–90), Professor Castells offered an alternative explanation of Chile’s success: the 17 years of measured state intervention and social redistribution, comparable to Roosevelt’s New Deal, that elected governments have pursued since Chile’s return to democracy in 1990.

After the stagflation of the 1980s, Latin American nations came under increasing pressure — both internal and external — to adopt a model of economic development based on liberalization, privatization, deregulation, adoption of austerity measures and containment of social demands. This theory dominated much of the 1990s, in Castells’ words, “…a period marked by the so-called Washington Consensus, labeled ideologically as neoliberal policies.”

While for many this model seemed the only possible solution to the challenges of development in the context of globalization, its trajectory as a tenable approach turned out to be remarkably short-lived. By the first years of the new century, most Latin American nations had written off neoliberalism as socially regressive and politically unstable. In addition, many countries subsequently elected left-leaning administrations in a widespread rejection of the Washington Consensus.

Since the end of the Pinochet dictatorship, Chile has seen a substantial improvement in the living conditions of its population, an unprecedented reduction of poverty and dramatic progress in education, housing and health. “In many ways,” Castells explained, “ Chile is the only success story of Latin American development.”

In the United States and throughout the world this singular success has largely been attributed to the free market, laissez-faire economic model implemented by Pinochet and his economic czars, known as “the Chicago Boys.” However, the empirical data — which Castells supplied in great quantity, having carried out research on the subject for a book he published in 2006 — emphatically refutes this notion.

Castells identified two distinct models of development in Chile since 1973: the “authoritarian liberal exclusionary model,” implemented under the dictatorship; and the “democratic liberal inclusive model,” which has been in place since re-democratization in 1990. "

Manuel Castell: "Globalization, Development and Democracy: The Chilean Democratic Model"