Continuity and Change in Chile’s Neoliberal Democracy

Abstract

In a region where neoliberalism is questioned in sometimes radical ways, Chile stands out for its robust governance, strong political institutions, and the relative stability of the neoliberal model (Panizza 2005a: 726). Chile is undoubtedly one of the few Latin American economies where opening the economy has led to steady, export-led growth. Nevertheless, inequalities in income and political influence are entrenched, despite some success in terms of poverty alleviation programs (Taylor 2006). Since the transition to democracy, Chile’s political economy has been one of “reformed neoliberalism” (Taylor 2006: 79–81), a balancing act between continuity and change (Gwynne and Kay 2000: 153). Continuity is considerable in the economic field where the democratic governments of the Concertación Democrática—the Center-Left coalition that has governed the country since General Augusto Pinochet’s seventeen-year-long military dictatorship ended in 1990—have been notable for their prudence and fiscal restraint, continuing the free-market economic policies undertaken by the military dictatorship. Continuity is also present in the social field. Here, however, there has been a more pronounced attempt to go beyond the Washington Consensus recipe for development. The state has been given a more active role in social policy and public expenditures have risen substantially, enabling a systematic cutback in poverty. This commitment to poverty alleviation, which successive governments have deployed to good effect as a demonstration of their genuine commitment to more equitable development, has served to limit the extent of domestic opposition to market democracy.