lecture nine, development

today we do Chile

the advent of neoliberalism comes through two roads: (1) revolution from above (happened in Chile, arguably Argentina, Colombia); (2) as a negotiated transitions

these are misnomers, insofar as they all involve negotiations and come 'from above'

no bourgeois State can unilaterally impose economic restructuring on capitalists, without negotiating with them.

however, this said, there was a difference in Chile—had to do with the level of violence used to impose it. the extent to which subaltern classes

Chile is also important in a second respect. one of the novelties of the experiment was that it was quite consciously made to restructure politically, as well as economically. the lower orders would not have the political capacity to push back the neoliberal agenda. it was set up, in short, to make neoliberalism 'safe' for democracy. the turn away from dictatorship to democracy was guided by Pinochet so that democracy would be unable to upset the neoliberal agenda, for elites.

all this said, let's pose the question of why the crisis of ISI leads to neoliberalism? in much of the literature, this is simply assumed.

but this begs the question. it turns 'a' crisis, into 'the' crisis – it didn't have to follow ISI. the solution to previous crisis of ISIs had been a re-vivification of ISI. why, now, neoliberailsm?

let's separate the two issues: (1) where the crisis comes from?; (2) why is neoliberalism the solution?

Chile stands out for being the (1) first country in LA to transition; also because (2) it is not caused by a direct economic crisis, but a political crisis.

Allende didn't 'de-mobilize' his base in the way that other SDs did. as soon as the mobilizations began, Chilean bourgeoisie torpedoed the economy. it was amplified by the US, of course.

Allende survives for two reasons: (1) mobilizations; (2) constitutional commitments of the Army

this broke down in 1973, with the coup

when the Army was in power, the Left was taken care of.

'free market fundamentalism' is the watchword of the new gov't, of course. but the actual pattern of reforms is interesting.

what 'business' wanted, according to Martinez and Diaz, was the continuation of protectionism and corporatism. this was their initial preference.

so the question, immediately, is why these preferences/policy change?

this is true of policy-makers, as well. the Navy is initially in charge, remember, and it's initially hesitant. the Chicago Boys find doors closed to them, initially. advisors only have as much power as capitalists give them. advisors don't sing seductive songs.

things change because of political conflicts in the first few years (in 1975)—they start worrying about the durability of the regime. elites argue to business that the specter of the previous era threatens to return. the right-wingers in the regime point to this.

in the Silva, the story is a bit distinct. there are internationally oriented capitalists, w/ liquid assests.

in any case, the Chicago Boys now find themselves with patrons.

there is, though, a question: why do the old capitalists relent so easily?

the answer is that this is because their power isn't what it used to be. the traditional elites were weakened by Allende's policy, reducing their clout. (worth thinking about here—resistance in first years is evidence of the opposite, remember. we have an underdetermination of theory by data).

but one thing is certain—business has invested an enormous amount of political confidence in Pinochet. somebody who wants to see Chile regain its economic growth. the business sector gave broad support to the government, according to Martinez and Diaz.

this is distinct from the idea of technocratic autonomy. they weren't insulated from political pressure, in the Martinez/Diaz, but the bourgeoisie ceded political power to the technocrats.

Vivek arguing that this is radical theory of State, not pluralist. the bourgeoisie 'cedes' autonomy. they were content to do so, largely because they had just seen it beat the shit out of labour. they have political confidence in Pinochet.

the neoliberal phase goes through two periods, according to Martinez and Diaz—1973-1983, 1983-1990

in the first phase, (1) liberalization, in terms of regulations; (2) privatization. lots of firms are going under in this period, the State had to re-regulate/nationalize failing sectors again and again, remember. neoliberalism is full of rent-producing behaviour. socialized costs, privatized gains. this is not economic dogma, but an intrinsically political project.

to understand neoliberalism, we cannot approach it as 'market fundamentalism'. free-market capitalism has actually required just as frequent interventions in the economy as ISI did. don't take this in the 'obscurantist way'--deregulation should not be confused with non-intervention

- - -

[1] class commitments vs. individual interests?

- - -

you have to establish the fact tht the internationally-oriented capitalists have clout. otherwise if it's a small sector, and you have a large component of the capitalist class not doing so well, the conditions for political stability just aren't in place.

Vivek saying that Silva' acct doesn't take into account how actually autonomous the State is, under capitalism

State actors are interested in growth? only for two reasons (1) warfare, which isn't much of an issue, today; (2) pressures from below, which aren't much of an issue under neoliberalism

we needn't be as concerned with passage of neoliberal policies, as their sustenance. that's why we won't talk about IMF as much. there are instances of attempted transitions that didn't work, in the 70s

States have to 'neutralize' dominant classes, under neoliberalism