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   Vol. 71/No. 3           January 22, 2007  
How capitalists used Pinochet dictatorship
in Chile to boost profits
(feature article)
Obituaries in the international big-business press have offered a “balanced” assessment of Gen. Augusto Pinochet’s blood-drenched record. Pinochet, who led a 1973 military coup against the elected government of Salvador Allende and imposed a U.S.-backed military dictatorship in Chile until 1990, died December 10, in Santiago, the capital, at the age of 91.

The editors of the Wall Street Journal said Pinochet was a “military dictator,” but one who “supported the free-market reforms that have made Chile prosperous and the envy of its neighbors.”

“The official death toll of the Pinochet dictatorship is some 3,197,” they noted in a December 12 editorial. “Civil liberties were lost and opponents tortured. But over time, with the return of private property, the rule of law and a freer economy, democratic institutions also returned.”

The business paper argued that Pinochet’s role “can’t be understood without considering the behavior of the Allende government he deposed.” It accused Allende of “unlawful assault on private property.”

In a December 13 editorial, the Dallas Morning News cited approvingly former Reagan administration official Jeane Kirkpatrick’s argument “that authoritarian nations, however objectionable, are to be preferred to totalitarian ones, because they can more easily make the transition to liberal democracy.” An “authoritarian” Pinochet was preferable to a “totalitarian” Cuba, it said.  
1970s working-class upsurge
In September 1970, at a time of ascending working-class struggles and radicalization in Chile and throughout South America, Chilean Socialist Party leader Salvador Allende was elected president. He was the candidate of the Popular Unity coalition, made up of the Socialist and Communist Parties as well as two capitalist parties.

Encouraged by Allende’s election, Chilean workers and farmers mobilized to fight for jobs, land, improved living standards, and expanded rights. When capitalists sought to sabotage production, workers in some cases took over factories and ran them without the bosses. Newly formed councils of workers—cordones industriales (industrial belts)—began to coordinate struggles.

In face of growing popular demands, the Popular Unity government nationalized U.S. copper mines and other foreign-controlled industries, and carried out other social reforms.

The social democratic SP and the Stalinist CP, however, promoted a course of subordinating the needs of working people to an alliance with “progressive” capitalists. They politically disarmed workers and peasants, fostering the illusion that the military brass was on their side.

Chilean and foreign capitalists, alarmed by the popular upsurge, organized a campaign to destabilize the economy, demoralize working people, and topple the government. Washington cut off aid to Chile except funding to the military. The Nixon administration financed bosses’ “strikes,” including one by truck owners.

Under these conditions, many small property owners and other middle-class layers were won over to the side of the counterrevolution. Middle-class and wealthy women held cacerolazos, pot-banging rallies, to protest the economic crisis. As the military openly plotted a coup, the SP and CP blocked workers’ demands for arms and initiatives to organize militias.  
Reign of terror under Pinochet
Military officers staged two coup attempts. The second one, on Sept. 11, 1973, succeeded. In the attack on the presidential palace Allende was killed. Gen. Augusto Pinochet set up a military junta, backed by Washington, that unleashed a reign of terror.

Thousands of unionists, political activists, and others were slaughtered or tortured. During Pinochet’s rule 250,000 people were imprisoned and an estimated 1 million forced into exile. The junta shut down Congress, censored the media, and banned workers parties and trade unions.

This outcome was a defeat for the working class whose effects were felt for years, both in Chile and internationally.  
Employers in Chile profit
The regime turned over many nationalized industries to former owners, privatized banks and utilities, freed up prices and interest rates, and slashed import tariffs. It implemented the “free-market” policies advocated by the “Chicago boys,” disciples of Milton Friedman at the University of Chicago. The pension and social security system was privatized—what today is hailed as the “Chilean model” by U.S. officials who advocate steps toward dismantling Social Security and Medicare.

In other words, naked repression allowed bosses in Chile to boost their profits by brutally driving down workers’ living standards through high unemployment, low wages, jacked-up prices, and regimented labor. That was the basis for the much-touted “success” of Chile’s economy.

The Pinochet regime was a loyal ally of imperialism. It backed London’s war against Argentina in 1982, and was part of Operation Condor, a campaign of kidnapping and assassination of political activists in other South American countries. Pinochet also received support from the Stalinist regime in China, eager to cultivate its ties with Washington (see article on this page).

By the mid-1980s Pinochet had outlived his usefulness to the Chilean capitalists and their U.S. backers. A bourgeois democratic government took office in 1990. Today another Socialist Party leader, Michelle Bachelet, runs the capitalist government.

Media talk about Chile’s “success” is measured by hefty profits for foreign investors and domestic bosses. It’s a different story for workers and peasants. By the time Pinochet left office, 40 percent of the population lived below the official poverty line, double the number from 1970, and real wages were slashed by 40 percent.

Today, the wealthiest 10 percent of Chileans account for nearly half of Chile’s income, while the poorest 10 percent receive less than 2 percent. These conditions fuel the ongoing struggles by working people in that country.
Related articles:
Chinese bureaucracy offered support to Pinochet  
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