The End of Neoliberalism in Chile?

The End of Neoliberalism in Chile?

The election of Gabriel Boric and the ongoing process to write a new constitution present a historic opportunity for the left to shape a new social pact in Chile.

In Santiago, Chile, on the 47th anniversary of the coup that ousted President Salvador Allende, a demonstrator burns a constitution (Felipe Vargas Figueroa/NurPhoto via Getty Images)

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In October 2019, the old Chile unexpectedly broke apart. An increase in the metro fare in Santiago sparked weeks of protests, led by high school students who called for riders to jump the turnstiles. As the protests escalated, the right-wing government of businessman Sebastián Piñera responded with disproportionate police force. Then, on October 18, in what would prove to be a fatal error, the government ordered the closure of all stations, leaving millions stranded in the streets. Within hours, the protests became massive. When night fell, barricades were erected in poor and middle-class neighborhoods. By the next morning, various metro stations on the outskirts of the capital were in flames. It was the violent beginning of what would soon be called the “Estallido Social”—the “Social Outburst”—or the “Chilean uprising” in English.

The months of protest that followed prompted a crisis that had been brewing since the beginning of the twenty-first century. The order in jeopardy was neoliberal Chile, designed during the long counterrevolutionary military dictatorship initiated in 1973 and continued with some reforms after the negotiated transition to democracy in 1990. The most tangible symbol of that era is the constitution, ratified by the Pinochet dictatorship’s fraudulent plebiscite in 1980. The document consolidated a mix of limited democracy and market economy, oriented around the interests of big business. It devolved social rights previously guaranteed by the state to the market, and at the same time weakened labor and union rights, undercutting the power of workers to organize. It is no coincidence, then, that the recent uprising coalesced around the demand for a new constitution. Less than a month after the outbreak of the protests, the government agreed to call a plebiscite on whether the constitution should be replaced. An overwhelming majority approved the measure in October 2020, and, in May 2021, Chileans went back to the polls to elect a Constitutional Convention. The results were surprising. The right won less than a third of the seats (something unthinkable just a few years before), losing its traditional veto power, while independent and left candidates made significant gains. While some alliances have shifted slightly in recent months, there still is a solid majority bloc identified with the popular demands articulated during the Estallido. Given the anti-neoliberal tenor of the protests, and the December victory of leftist Gabriel Boric in the presidential elections, the constitutional process presents an excellent opportunity for the Chilean left to shape a new social pact.

 

Neoliberal Democracy

Chile experienced relative calm for almost three decades after the transition to democracy. The first elected government in 1990, led by the Concertación de Partidos por la Democracia—the center-left coalition forged during the military dictatorship as a moderate opposition bloc—successfully displaced Augusto Pinochet and the military. After coming to power, many of the coalition’s economists, ideologues, and technocrats decided—whether out of conviction or fear—to maintain the central features of the economic order established under Pinochet. The history of this model is well-known: the so-called “Chicago Boys,” a group of neoclassical economists, convinced the dictatorship to reform the economy in favor of big business. Pinochet and the military implemented the rapid privatization of education, social security, and healthcare. By privatizing dozens of state businesses, they created a new oligarchy and built an important base of support for authoritarianism.

In the 1990s, neoliberalism gained the democratic legitimacy that it had previously lacked. This consolidation was underwritten by an expansive economic cycle that radically improved material conditions for a majority of Chileans. Poverty dropped to historic lows, and consumption increased in all social classes thanks to the availability of credit. The business class also enjoyed advantageous conditions for accumulating wealth. Perhaps the most controversial policy of the era was the use of the enormous resources of the mandatory privatized retirement funds, the Administradoras de Fondos de Pensiones (AFP), for speculation. For some years, the free market, social stability, and sharp inequality seemed perfectly compatible.

In this same period, the left suffered the consequences of a division that began under the dictatorship. The defeat of the revolutionary project of Salvador Allende’s Popular Unity led to a long period of reflection and self-criticism across the left. The Communist Party (CP) and other radical groups lamented the lack of a consistently militant politics and insisted on the need to use “all of the forms of struggle,” including violence, in the fight against the dictatorship. The failure of that strategy, along with the fall of the Soviet Union, left the CP politically isolated during the 1990s and into the 2000s. Meanwhile, significant parts of the Socialist Party, the historic party of Allende, went through a process of “renovation” in which they renounced Marxism and the revolutionary horizon in favor of liberal democracy. The Socialists entered into alliance with the Christian Democrats—who had supported the 1973 coup but soon became alienated from the dictatorship—as a moderate bloc of democratic, anti-authoritarian opposition. The two parties were the base of the Concertación, which agreed to participate in the 1988 plebiscite on whether to extend Pinochet’s rule. Thanks to a huge mobilization and international pressure, the opposition to Pinochet won. The next year, the Concertación easily won the presidential elections, the beginning of twenty years in power for the coalition. But the Concertación governments hesitated to push for major ideological changes. Instead, they maintained the central pillars of the neoliberal model, now legitimized with a new, although limited, democratic system.

 

The First Cracks

While the parties of the left were divided, there were early signs of dissatisfaction with neoliberal democracy. Many younger people were disengaged from the political system. In the first decade of the twenty-first century, apathy turned into anger, especially among high school and university students in the privatized, class-segregated educational system. The Penguin Revolution (named after the colors of school uniforms) in 2006 was the first indication of a deeper disaffection. Hundreds of thousands marched in protest of school-related fees, and in favor of making a quality education available to all. The Concertación, then in its fourth consecutive term in office, still had the ability to defuse the conflict with minor reforms and a promise of future improvements.

The situation changed in 2010 when Piñera was elected president. He brought into government the heirs of the Pinochet dictatorship, exposing the mechanisms of accumulation and marketization that were previously hidden behind a veneer of progressivism. The following year, protests led by social movements independent of the political parties of the transition erupted around the country, coinciding with other mobilizations like the Arab Spring and Occupy Wall Street. Environmental movements began to mobilize against the extractivist economic model and the destruction of the natural world. More prominently, university students went into the streets, once again protesting the class segregation produced by the high fees charged by private and state colleges, which required taking on onerous debts managed by private banks. For the new generation of political leaders forged by these protests, it was clear that failures of the educational system were part of a broader problem related to the limits and inconsistencies of the democratic transition.

The Concertación had one last opportunity to respond meaningfully to the student protests when it defeated the right in the presidential elections of 2013. Michelle Bachelet, who had already served as president between 2006 and 2010, returned to power with a mandate for reforms, including free education and replacing the pension system. In this effort she had the support of an important segment of student leadership, including members of the CP (at that time a part of the governing coalition) as well as those who organized the Frente Amplio (Broad Front)—a new left-wing political coalition composed of former student leaders inspired by movements such as Podemos in Spain and Syriza in Greece, which held a few seats in the Chamber of Deputies. But the unified opposition of the right, corruption in Bachelet’s inner circle, and the conservative disposition of some Concertación technocrats conspired against the reform project. The pensions system was barely modified, and the goal of free higher education was transformed into an enormous transfer of resources to private universities.

In the meantime, Chileans were witnessing a collapse in the prestige of institutions that had been mainstays of the political system for decades. The Catholic Church lost its moral authority as systematic sexual abuse by priests came to light. The armed forces and the police were accused of diverting millions in public funds. Numerous charges of corruption and illegal campaign financing were lodged against business owners and the political elite, in a country that had been proud of the rectitude of its public officials.

Throughout this period, protests continued and expanded to confront new issues. The “No + AFP” (No more AFP) movement brought together hundreds of thousands of Chileans in 2016 and 2017 to repudiate the system of private retirement accounts. In Araucanía, the region of Chile with the highest proportion of indigenous residents, conflicts over lands intensified, and the historic demands of the Mapuche people gained popular support. And in 2018, a wave of radical feminism ran through Chile. All of this happened outside of the political parties of the transition, which reproduced themselves peacefully within the state apparatus but became ever more isolated from the passions and opinions of Chilean citizens. This disconnect manifested in electoral abstentionism, providing an opportunity for the resurgence of the right. In 2017, Piñera won back the presidency in a low-turnout election.

 

The Constitutional Problem

In the years leading up to the 2019 uprising, the goal of replacing the constitution began to circulate in popular movements. When the idea was first raised, however, during the student protests of 2011, it was mocked by the right and a good part of the Concertación. To its credit, Bachelet’s second government intended to begin a constituent process, but it lacked the political will to bring it to pass, and it fell apart alongside pension and education reforms. It was only as a result of the protests that the idea emerged as something possible and urgent.

Pinochet’s military dictatorship had once viewed constitutional reform with similar urgency. It began to work on a new constitution shortly after taking power, convinced that the democratic system rooted in the constitution of 1925 was irremediably obsolete. The military junta wanted to eliminate the possibility of a new revolutionary, anti-capitalist project and radically change the economy, political institutions, and even the hearts and minds of Chileans. At the end of the 1970s, a small commission empowered by the dictatorship presented the first outlines of a new constitution. After modifying the document to concentrate and expand the regime’s power, Pinochet ratified it through a plebiscite with no electoral lists and no political opposition allowed.

During the challenge to the authoritarian order that began with enormous national protests in 1983, demands for a new constituent assembly began to emerge. Nevertheless, the moderate opposition—the alliance between Christian Democrats and the Socialist Party—ended up accepting the transition process outlined in the constitution of 1980, which led to the defeat of the dictator at the ballot box through another plebiscite in 1988. The coalition’s pragmatism was driven by the defeat of the insurrectional strategy of the radical left and the government repression of protests. Moderate leaders pushed to reform the more anti-democratic aspects of the constitution—like the outlawing of Marxist parties—through negotiations with the regime in 1989.

These negotiations enabled a series of anti-democratic mechanisms to survive during the transition, including the presence of appointed senators (made up of former members of the Supreme Court, the armed forces, and other state institutions, all of whom were markedly conservative), a binomial electoral system that allowed the right to control half of Congress with around a third of the votes, and the inability of the president to remove the high command of the armed forces, among other rules. The social scientists of that era called these aspects of the constitution “enclaves autoritarios” (authoritarian enclaves). Some changes were achieved in 2005—such as the end of the appointed senators—once again as the product of negotiations between the Concertación and the right. But the demand for a new democratic constitution was cast aside in favor of political stability. The goal remained an aspiration of the left (mainly the CP and other small radical groups) that was excluded from the terms of the transition.

 

The Left and the Constitutional Convention

How did the issue of constitutional transformation become so important? First, it has symbolic value, given that the constitution was a foundational project of the dictatorship and played an important role in the incomplete transition to democracy. But the constitution also presents serious problems for a functioning democracy, such as “organic laws” that regulate central aspects of the state and the economy and a Constitutional Tribunal made up of conservative judges, which blocks many of the reformist laws approved in Congress.

It’s important to remember that it was only in the face of the massive, disruptive protests of 2019 that the right-wing government was forced to cede the political order designed under the dictatorship. However, the path that led to the formation of the Constitutional Convention was not easy. The repression of protests in 2019 included dramatic declarations of “war” by Piñera, violations of human rights, and the deployment of the military onto the streets, recalling the darkest moments of the military dictatorship. Amid an intensifying crisis, the National Congress negotiated the Agreement for Peace and the New Constitution, which was signed on November 15, less than a month after the protests had begun.

Much of the congressional left—especially the CP and parts of the Broad Front—was skeptical of the accord and did not sign. One of the most sensitive points was the requirement of a two-thirds majority of convention delegates for the approval of new articles, which, given the electoral balance of power at the time, would appear to hand the right virtual veto power. In spite of these limitations, others believed that the situation offered an unprecedented opportunity to put an end to the neoliberal democracy of the transition. That was how Gabriel Boric, a young deputy from the Broad Front and former student leader, saw it, when he, acting against his own political party, signed the document. The move ended up having surprising consequences for Boric, since it marked the beginning of his bid for nationwide political leadership. Boric’s position was shared by a majority of Chileans. In a plebiscite held in October 2020, almost 80 percent of the votes were cast in favor of the formation of a Constitutional Convention. The Agreement set in motion a chain of events that will realize one of the left’s dearest dreams: ending the Pinochet constitution.

In the elections for delegates for the convention, which took place in May 2021, the right was reduced to a minority without the veto power to which it is accustomed. Instead, the forces on the independent left—many of them local activists from outside Santiago, former protest leaders, and progressive academics—together with the historic parties of the left, elected a large number of delegates. Along with the representatives in seats reserved for indigenous peoples, they may form a majority bloc, although there are important differences among them. The result has had an impact on the presidential race as well. The left-wing alliance composed primarily of the Broad Front and the Communist Party (the Socialist Party decided to stick with the Christian Democrats) won an impressive number of votes in the primary elections. Meanwhile, the traditional right has struggled to convince voters that it is open to limited reforms to the oligarchic and reactionary neoliberalism that it defended not so long ago. In a sign of the depth of the political crisis on the right, a far-right candidate, José Antonio Kast—who openly defends the military dictatorship, criticizes the Piñera government, and identifies with Brazilian President Jair Bolsonaro—now leads the conservative reaction against the protests and the new constitution. In a surprising result, Kast received the highest percentage of the vote in the first round of the presidential elections—27.9 percent—ahead of Boric with 25.8 percent. But Boric ultimately won the December 19 second-round election with nearly 56 percent of the vote. Boric’s election marked the end of the political order of the transition once dominated by the Concertación and the traditional right. Still, the strength of the far right is a reminder of the fragility of the Chilean political order and the contingency of the gains made by the left. There is much work to do in order to build a viable alternative to a delegitimized neoliberal democracy.

The constitutional process is a historic opportunity for the Chilean left for at least two reasons. First, it represents the institutionalization of the conflict started by the uprising. In spite of the unaffiliated and strongly anti-party nature of the protests, the left has been able to connect with the new common sense created by the people in the streets and to channel it into a force for change in the Constitutional Convention. Among other things, the left is the political force best prepared to take up the feminist, environmentalist, and indigenist causes that now have majority support but have been largely ignored by the parties of the transition. With Boric beginning his presidential term in March, he and the left have the opportunity to consolidate the new constitutional order from a position in government. Their legitimacy will be bolstered by a constitution that establishes a new role for the state in matters of social rights and the regulation of big business.

It is very possible that the convention will remove the most salient features of the 1980 constitution, such us the remaining enclaves autoritarios or the rather rigid notion of private property, which has allowed the commodification of water rights, among other policies. Other critical aspects of the convention include a constitutional recognition of indigenous peoples, new definitions of society and the family that will allow for legislative changes such as the legalization of abortion, and effective and concrete limits on the exploitation of natural environments by transnational mining, forestry, and fishing companies. And the convention is expected to decommodify the social security, health, and educational systems. All of these demands align with the left’s historic agenda. Political conflicts will soon take place within the constitutional form of a post-neoliberal social democracy.

But there are also political risks to consider. The length and divisiveness of the Constitutional Convention is already threatening to alienate a broad swath of the public, which may affect the legitimacy of the text that emerges from it. The right and the conservative mass media are determined to discredit the convention, using any errors or delays to prove their point—and the support Kast received in the presidential election proves that they have made inroads. At the same time, there have been important disagreements within the progressive camp, especially during the debate on the rules that will guide the process. The maintenance of a two-thirds quorum established in the original authorization of the convention provoked bitter debates among the left. In future disputes, the left will have to balance adhering to its historic commitments and not jeopardizing the overall success of the deliberations.

Beyond the parties, there is also the risk that certain aspects of the progressive platform could end up inspiring more division than unity. The political theorist Nancy Fraser has written about the difference between a “politics of recognition” and a “politics of redistribution.” The former, which is widely supported by younger generations, values diversity and difference. These aspirations come from the left, of course, but they shouldn’t be the only goals; without an accompanying politics of redistribution—which aims to improve social and material conditions and diminish the power of big business—the politics of recognition can prove alienating to some voters. To that end, the left bloc in the convention should emphasize changes to the constitution to establish the right to unionize, the right to strike, and other legislation that would directly impact the lives of millions of workers.

The process of change in Chile is connected to a broader political shift across Latin America, which has been expressed in different ways in each country—from the Colombian uprising to the election of Pedro Castillo in Peru and Xiomara Castro in Honduras. There are signs of a global restructuring in the wake of the COVID-19 pandemic, characterized by the desire for greater control of capital flows and an awareness of the need to reduce the extreme concentration of wealth and to take climate change more seriously. If the world does enter into a post-neoliberal phase—by no means a certainty—Chile may serve as a guide and a laboratory, just as it was in the second half of the 1970s when it became the pioneer in radical neoliberal economic reform. Today the Chilean left has the opportunity to help build a new order that may shape the social, economic, and political structures of the country for years to come, and it may also have important regional and global reverberations. Replacing the constitution is not the same thing as a revolution, or an immediate change in the relations of power. But it represents the definitive overcoming of the long military dictatorship and its neoliberal legacies, and a radical improvement in the opportunity to develop a robust progressive agenda. It is a moment to advance toward the horizon that a good portion of the Chilean left has always sought: democratic socialism.


Marcelo Casals is an independent scholar based in Santiago, Chile. He holds a PhD in Latin American history from the University of Wisconsin–Madison.

Translated by Patrick Iber.


Lima