September 2023 marked the 50th anniversary of a bloody coup d’etat that toppled Chile’s socialist government in 1973. Led by General Augusto Pinochet, the military dictatorship that took power killed or “disappeared” more than 3,000 people over the next 17 years.

What is less well-known, is that ousted President Salvador Allende’s ambitious socialist programme was replaced by one of the earliest and most expansive neo-liberal experiments in the world.

“The neo-liberal policy starting in 1974 and ’75 could not have been carried out in Chile without a dictatorship,” said Raúl González, an economics professor at the Academic University of Christian Humanism in Santiago.  “And this was due to the influence of a group called the ‘Chicago Boys.'”

Listen to this hour-long radio documentary, which aired in October 2023 on CBC’s Ideas programme.

General Augusto Pinochet (L) poses with Chilean President Salvador Allende 23 August 1973 in Santiago, shortly after Allende appointed him the head of the army, just three weeks before the Pinochet coup that killed Allende. (Photo by AFP)

“The neo-liberal policy starting in 1974 and ’75 could not have been carried out in Chile without a dictatorship,” said Raúl González, an economics professor at the Academic University of Christian Humanism in Santiago.

“And this was due to the influence of a group called the ‘Chicago Boys.'”

Chile’s economic right-turn

‘Chicago Boys’ was a nickname given to a group of Chilean economic students who, under an agreement between Chile and the U.S., studied at the University of Chicago — home to professors like Milton Friedman, who were extolling a new, radical economic theory now known as neo-liberalism.

The exchange program was set up by the U.S. State Department beginning in 1955 as part of an effort to counter Soviet influence in Latin America.

Most of the graduates who returned to Chile in the 1960s and ’70s worked in relative obscurity in banks, think-tanks and universities.

“They are considered to be completely crazy,” said Sebastian Edwards, an economics professor at the University of California, Los Angeles. “Then when the coup comes in 1973, the military uses them. They put together a neo-liberal program which has markets at every level, and it transforms the Chilean economy in a massive way.”

It was the ultimate paradox: a powerful state that was omnipresent in matters of security and repressing dissent, yet all but absent in vast areas of social and public life. From schools and pensions to healthcare, private businesses began to provide public services, and under Pinochet, this pro-market system was enshrined in the constitution.

Despite the country’s return to democracy in 1990, the same constitution remains to this day, even after a succession of centrist governments.

Chileans take to the streets in protest

Years of economic growth have led some to describe Chile’s performance as something of a miracle, while others point to the country’s levels of inequality as being among the highest in the world.

Eighty per cent of the country’s wealth belongs to the top 10 per cent of the population.

“The fact that Chile grew so much, I think, has had an effect in increasing the sense of injustice, because you can see the economic growth everywhere,” said Claudia Heiss, Political Scientist at the University of Chile.

“You can see the price of life getting higher. It’s much more expensive to live in Chile than to live in Argentina or Mexico. But the salaries are not enough to live at that scale.”

Public anger has culminated in multiple protests in recent years, reaching a boiling point in October 2019, with a rise in Santiago’s metro fares. Young people barged into metro stations across the city, refusing to pay. Stations were vandalized, some set on fire.

By October 25, more than 1.2 million people were on the streets of Santiago in the country’s biggest protests since it became a democracy in 1990. Placards were emblazoned with the words “it’s not the 30 pesos, it’s the 30 years.”

A new constitution

In a referendum in 2020, close to 80 percent of Chileans voted to change the constitution.

But a draft charter granting Indigenous and LGBTQ+ rights and greater environmental protections was rejected by two-thirds of voters in another referendum last year. Many thought it had gone too far.

A second draft will be voted on in December 2023. But with the new constitutional council dominated by right-wing parties, questions of crime and immigration are beginning to eclipse protesters’ initial concerns over economic injustice.

For some, this signals the beginning of the end of neo-liberalism, while others are wary of reforms that can be reversed.