The global community continues to experience the direct consequences of the overthrow of the democratically elected President of Chile, Salvador Allende on 9/11/1973. With the torture and deaths of 30+k people, Chile was turned into a real-world economic experiment, implementing Chicago-style monetary plans, now known as TINA (there is no alternative) or the Washington consensus.
Neoliberals call Chile’s 1974-90 period a miracle, but it is best seen as what should have been a warning against imposing similar policies in other countries. Under what became known as the Washington Consensus the economy was subjected to totalitarian libertarian doctrine. Public enterprises were given away to the junta’s supporters with virtually no money down. The result was mass bankruptcy, economic collapse, and a polarization of wealth and political power that transformed the country that had been one of Latin America’s most stable middle-class democracies.
Fortunately, Mrs Thatcher’s determination to repeat the same policies in the UK, stopped short of imposing monetarism through a military dictatorship (although I’m not sure that the miners thought that she eschewed violence). Instead, we have had the same measures of privatisation, financialisation, and pensions capitalism delivered by stealth in small increments over the last 30 years. The strategy is starve the public services of funding, introduce competition and when the service is failing, privatise with the mythologies of efficiency and cheapness. The coalition government is justifying rushing through many of the end-game plans of Margaret Thatcher’s cabinet using Shock doctrine/Disaster capitalism. In other words, on the basis of a global banking crisis that Margaret Thatcher’s Big Bang deregulation of the financial sector made inevitable.
[E}fforts to turn Salvador Allende’s death into a martyrdom for democratic socialism obscure the most important legacy of the coup. Not only did it give rise to one of the twentieth century’s most violently repressive regimes, it inspired subsequent financial dictatorships to use privatization schemes to consolidate their power.
It is now well established that the CIA were involved in the Chilean coup which resulted in the brutal dictatorship of Margaret Thatcher’s friend, General Pinochet.
Michael Hudson explains why the US were pivotally involved:
What seems to have upset Mr. Kissinger was the fact that socialism came to power through democratic election. It was a basic axiom of right-wing “free market” philosophy that socialism could only take over by dictatorship. Allende’s victory showed this premise to be wrong. So a theory of society and doctrine of the global future was being threatened.
A second axiom was that socialist planning could not provide a prosperous economic environment, and especially that prosperity could not be gained by breaking away from what now is called the Washington Consensus. Under Allende, Chile sustained a hefty 8.9 percent increase in its GNP and at first succeeded in reducing the country’s inflation rate. During his nearly three years in office he gained support by providing the poor with better access to housing, education, food and health care than previously.
Kissinger felt that the United States needed to show that socialism was bound to fail economically. Rather than leaving this to the “free market,” America used the famous “invisible hand” not Adam Smith’s invisible hand of free enterprise, but the covert hand of CIA destabilization.
One remaining problem had to be countered. That was the threat that Chile’s army might obey its constitution and promote the country’s independence rather than favoring U.S. policies. The leading Chilean general was a constitutionalist who believed that the army should stay out of politics. He had to be murdered in order to replace him with a more U.S.-oriented general, who turned out to be Augusto Pinochet who quickly became an acolyte of the Chicago Boys.
This has shades of US’s involvement across the globe, and does not augur well for the democratic removal of neoliberalism.
The following video clip is a 2002 response from Chile to the US following the other 9/11 – the attack on the Twin towers – and speaks eloquently about the horrors of what was unleashed for the benefit of the US-backed oligarchy.