General Pinochet came to power in Chile in a coup which cost the lives of over 10,000 people. The coup brought to an end the socialist government of President Allende and inaugurated an experiment in monetarist economics which Time Magazine described as ""a model of what can be achieved in restructuring an ageing prostrate economy into a streamlined machine."" A decade later, the experiment collapsed and Chile entered the worst economic crisis in its history and Pinochet faced widespread opposition.

Chile: The Pinochet Decade tells the story of the rise and fall of the laissez-faire economic technocrats known as the Chicago Boys, who masterminded the experiment and it analyzes the nature of their alliance with General Pinochet. The book shows how the Chicago Boys promoteed a concept of ""economic liberty"" based on the individual's right to compete in free markets. This could only be implemented through a state with vastly increased powers of repression and surveillance. In this way, manual and white collar workers and the rural and urban poor were forced to accept dramatic falls in their living standards which were a consequence of the model. For the Chicago Boys presupposed a political and economic system in which only the privileged few are actors and notions of social justice do not figure. Chile: The Pinochet Decade traces the failure of the model from the ""shock treatment"" of 1975, in which the economy was massively contracted in order to reduce inflation, through the supposed miracle years of high growth funded by foreign loans, to the bankruptcy and final abandonment of the free market model.

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Chile: The Pinochet Decade

The Rise and Fall of the Chicago Boys

By Phil O'Brien, Jackie Roddick

Practical Action Publishing

Map of Chile, iv, 
1. Chile in Brief, 1, 
2. New and Old Extremisms, 14, 
3. Popular Unity 1970-1973, 23, 
4. The Making of the Coup 1970-1973, 30, 
5. The Transition 1973-1974, 42, 
6. The Shock 1975-1976, 54, 
7. Fool's Gold and Fool's Democracy, 67, 
8. The Roots of Resistance, 88, 
9. The End of the Dream, 97, 
10. The Model in Retrospect, 106, 
Appendix: Human Rights and the Pinochet Decade, 110, 
Bibliography, 118,

CHAPTER 1

Chile in Brief

Chronology

1541 Foundation of Santiago by Pedro de Valdivia.

1818 Chile achieves independence from Spain under leadership of Bernardo O'Higgins and Argentinian San Martin. O'Higgins becomes first president (Director Supremo) of Chile.

1833 New constitution, introduced by Diego Portales, establishes strongly-centralized and authoritarian state.

1879-1883 Bolivia and Peru defeated by Chile in the War of the Pacific. Bolivia loses access to the sea, and Chile gains possession of the Atacama desert, main source of the world's supply of nitrates.

1891 Defeat of President Jose Manuel Balmaceda in brief civil war.

1907 Massacre of 3,000 miners by troops after demonstration in nitrate port of Iquique.

1920 Arturo Alessandri elected as president.

1922 Communist Party of Chile officially formed.

1927-1931 Military dictatorship of Colonel Carlos Iba�ez.

1932 12-day 'Socialist Republic' of Colonel Marmaduke Grove. Arturo Alessandri elected as president for second time.

1933 Foundation of Chilean Socialist Party.

1938 Election of Popular Front government, with a programme of state investment and state protection for national industry, under joint banner of Radical, Communist and Socialist Parties.

1948Ley Maldita, or the 'Evil Law', bans the Communist Party.

1952-1958 Second administration of Carlos Iba�ez.

1958 Salvador Allende, presidential candidate for the Popular Action Front (FRAP), loses to National Party candidate, Jorge Alessandri, by 33,000 votes.

1964 Eduardo Frei, Christian Democrat candidate, wins election with 56 per cent of the vote, offering 'revolution in liberty' as an alternative to Marxist socialism.

1970 Salvador Allende, candidate for Popular Unity, wins presidential elections with 36 per cent of the vote, and becomes first ever elected Marxist president.

1973 Military coup. Military junta composed of Leigh, Merino, Pinochet and Mendoza takes power; Popular Unity parties banned; others suspended. National trade union confederation CUT dissolved. Congress dissolved; Comit� Pro Paz created by Catholic and Lutheran Churches to deal with victims of repression. Junta organizes legislative committees: army controls defence and Leniz named minister of economy.

1974 DINA, Chile's secret police, created, solely responsible to Pinochet, who now becomes officially head of junta; El Mercurio outlines two alternative measures to reduce inflation: gradualism or economic 'shock treatment'; Christian Democrat advisers leave government; ban on union elections. Wage freeze continues, but old law of contract reinstated against employers' opposition; General Prats murdered in Buenos Aires. Miguel Enriquez, leader of MIR, killed in Santiago; El Mercurio comes out in favour of shock treatment in November. Privatization of banks announced; Pinochet becomes president of Chile in December.

1975 General Bonilla killed in air crash. Friedman and Harberger visit Chile to support 'shock treatment' to reduce inflation; cabinet reshuffle, consolidating 'Chicago' hold on government. Minister of finance Cauas announces introduction of 'shock treatment'; Movement of National Unity created by Declaration of Codegua, in face of growing economic emergency and world hostility to Chile; arrest of trade unionists from El Salvador copper mine. Ministry of interior (responsible to Pinochet) takes over control of trade union affairs from General Diaz and air force; Academy for National Security created; Leigh declares social cost of Chicago Plan too high; assassination attempt on left-wing Christian Democrat exile Bernardo Leighton in Rome; Comit�: Pro Paz dissolved, Vicaria de Solidaridad created; withdrawal of British ambassador after torture of Sheila Cassidy, a British doctor.

1976 Cabinet reshuffle: air force General Diaz replaced by Chicago supporter Sergio Fernandez at ministry of labour; El Mercurio reports 20 minute strike attempt at Chuquicamata copper mine; Group of Ten right-wing Christian Democrat trade union leaders emerge into open with public letter to Fernandez; Letelier murdered in Washington; CNS made up of Marxists and leftwing Christian Democrats makes its first public appearance with another open letter to Fernandez; pro-government union confederation UNTRACH formed; Chile withdraws from Andean Pact.

1977 All political parties made illegal; British mediation awards Chile legal title to three disputed islands in Beagle Channel; DINA disbanded in wake of Letelier scandal, replaced by CNI; Bardon (Chicago supporter) president of central bank, says Chile will increase its foreign debt to speed up battle against inflation; Friedrich Von Hayek, father of free-market 'Chicago model' visits Chile; economics minister De Castro announces reduction of virtually all tariffs to 10 per cent.

1978 State of siege changed to state of emergency; Fernandez becomes minister of interior. Hernan Cubillos becomes minister of foreign relations with mandate to end Chile's diplomatic isolation; members of US AFL-CIO visit Chile at the invitation of the Group of Ten; Leigh and eight other air force chiefs retired. Matthei becomes chief of air force and new member of junta; Pinochet holds fourth mass meeting with trade union leaders organized by Secretario de los Gremios; Manuel Contreras indicted for murder of Letelier. Argentina calls up reserves and sends troops to Chilean border. Pinochet gives in to demands for union elections, and allows them in private sector. CNS federations dissolved; Vatican's offer to mediate the Beagle issue is accepted, after church in Chile and Argentina organizes protest demonstrations against war; US unions announce plan to organize a transport boycott of Chilean goods; first public discussion of the 'disappeared' of 1973 after bodies are found at Lonquen. Cabinet reshuffle: Fernandez's deputy at the labour ministry is replaced by Chicago Boy Jose Pi�era, completing the Chicago revolution.

1979 Pi�era promises restoration of trade union rights, an end to police surveillance of trade unions. Proposed US union boycott is lifted; collective bargaining begins for first time since the coup; size of US Embassy in Santiago cut as protest over government's failure to extradite Contreras.

1980 Government wins strike at El Teniente copper mine, seen as a victory for Chicago-style Labour Plan; protest march by student doctors unable to get jobs; Pinochet's trip to Philippines cancelled hours before his arrival; Cubillos is sacked as foreign minister; in first free university elections, opposition students win...

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