Web Only / Views » February 19, 2020
Where the Ongoing Mass Protests Against Neoliberalism in Chile Came From
Chileans are still taking to the streets to protest an unjust economic order. It will take a political movement to change the system.
In recent months, common people in Chile have taken to the streets not to pursue an ideological project or concrete cause—but as the result of the fragility and insecurity of everyday life, and the injustice of the political system. We have seen this with the Occupy Wall Street movement, in the context of the Arab Spring and the Indignados Movement in Spain. Although more than two months of social mobilizations forced the right-wing billionaire Sebastian Piñera government to implement policies it has previously opposed such as the reform of the constitution and the increase in public social spending, none of the major political forces were able to channel the movement giving rise to questions about the durability of these mobilizations in the long term. The political debates have increasingly focused on questions of institutional reforms and transparency, which although important for framing future political struggles, tend to mask more urgent economic reforms such as greater taxation of wealth and universal access to social services. Such policy changes are indispensable for the reduction of Chile’s exorbitant inequalities.
The social explosion started in Santiago on October 18 following clashes between the armed police and students who were evading raised metro fares. Mobilizations quickly spread throughout the country demanding justice and change of the highly unequal economic model, bringing together a range of qualms that are typically discussed in isolation: low pensions, highly unequal healthcare, underfinanced education, political corruption and frequent cases of economic collusion between producers to raise consumer prices. The mobilizations boasted unprecedented social support: surveys conducted at the end of October demonstrated that close to 85% of the public supported the protests and after two months of mobilizations, support for them still stood at around 77%.
Chile’s current economic model was established during the Augusto Pinochet dictatorship (1973-1989) by a group of Chilean economists educated at the University of Chicago under Milton Friedman. The country’s economy is widely considered to be the first attempt in the world at the introduction of a thorough program of neoliberal restructuring—many of the reforms established by Ronald Reagan in the United States and by Margaret Thatcher in the UK were first “tested” in Chile during the second half of the 1970s. The reforms included unprecedented liberalization of trade, the establishment of a new labor code which practically prohibited collective bargaining, financial liberalization, privatization of public companies, diminished per capita social spending, regressive tax reform and privatization of pensions. When it came to education and healthcare, reforms led to the creation of dual public and private systems, making access to education and healthcare the responsibility of individuals through their participation in the market.
The reforms carried out during the dictatorship (as well as the 1982 economic crisis) contributed to increased inequalities and a ballooning poverty rate (in 1987 close to 45% of the population lived under the poverty line), a greater concentration of wealth, a fall in real wages and an increase in unemployment.
Continuity and change
During much of the post-dictatorship period Chile was governed by center-left coalitions (between 1990 and 2009 and then 2014 and 2017, with the first right-wing Sebastian Piñera government in the interim), which focused on addressing extreme poverty and Chile’s rampant inequalities, but within the framework of the economic model inherited from the dictatorship.
Members of the coalitions have frequently pointed to the 1980 Constitution—written by Pinochet’s advisers and approved in a fraudulent plebiscite—as a structural limitation on any major reforms to the economic model. The constitution limits the state’s absolute ability to provide social services such as health, education and pensions, virtually prohibits strikes of public sector employees, obliges workers to join private pension funds, gives the president substantial control over Congress and makes it extremely difficult to reform the armed forces and the police, as well as the electoral and educational systems, because of extremely high quorum required for the approval of the reforms.
The governments of center-left coalitions did manage to decrease poverty and income inequalities. However, access to quality social services remains highly unequal and the relative poverty rate is very high. Chile’s tax system also features regressive characteristics while public social expenditure is tiny, translating into low quality public social services. In addition, the job market is highly segmented and a high share of the population works with temporary contracts or is self-employed in low skilled jobs, meaning their access to social services is also limited.
The recent mobilizations practically paralyzed the Chilean economy, which helped force the right-wing government of billionaire Sebastian Piñera to make concessions, such as paving the way toward the replacement of the 1980 Constitution (a plebiscite on whether a new constitution should be drafted is scheduled for April), scrapping plans to lower corporate taxes and increasing cash transfers to the poorest including modest cash subsidies to employees earning the minimum wage and those receiving the basic pension. The government also announced projects to increase sentences and fines for corporate collusion and fraud.
Social mobilizations have shaken the political system and demonstrated that the injustice of the neoliberal economic order is felt across Chilean society. But it is so far uncertain how the solutions to this broader issue will be achieved—and who will implement them. After the social explosion, the political Left has emerged highly divided and unable to channel social demands. According to a recent poll, although the president has record low approval rates (only 11%), the most popular political figures are associated with the political right and support has dropped for young left-wing politicians who have won elections by promising to transform Chile’s economic model.
Protesters have continued flowing to the streets but their dissociation from political parties and unions makes their calls increasingly appear as individual demands which can be satisfied through occasional cash transfers and reforms. Without a broader political movement, however, these reforms may simply consecrate the unequal status quo.
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Anna Kowalczyk teaches political economy in the Institute of Public Affairs, University of Chile in Santiago.