Process
Status Items Output None Questions None Claims None Highlights Done See section below
Highlights
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Both men gave advice to Pinochet, and both had disciples in his authoritarian government — Friedman among the Chicago-trained técnicos (or “Chicago Boys”), who formulated its economic “shock” program, and Hayek among the conservative Catholic gremialistas, who produced an institutional order to protect the economy from political challenge. These two civilian elite factions were to define the economic and political orientation of Pinochet’s government.
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As the government unleashed a brutal program of torture, assassination, and extrajudicial killing aimed primarily at Hayek’s own antagonists — leftists, social democrats, and trade unionists — he remarked that he had “not been able to find a single person even in much maligned Chile who did not agree that personal freedom was greater under Pinochet than it had been under [Salvador] Allende.”
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they argued that the junta had saved Chile from a totalitarian regime, reversing a history of planning and state intervention, and making possible individual freedom and human rights.
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The neoliberals in Chile mobilized a stark dichotomy between politics as violent, coercive, and conflictual, and market relations as peaceful, voluntary, and mutually beneficial.
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This neoliberal version of human rights justified constitutional restraints and law as necessary to preserve the individual freedom that only a competitive market could secure.
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Rather than protecting individuals from state repression, neoliberal human rights operated primarily to preserve the market order by depoliticizing society and framing the margin of freedom compatible with submission to the market as the only possible freedom.
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Friedman and his Chicago School colleague Arnold Harberger
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The Chicago Boys’ opposition to the politicization of the economy preceded Allende’s victory by decades, but his socialist government’s economic planning, Keynesian demand-stimulation, and wealth redistribution provided their ideal adversary, and brought them to the attention of Chile’s business elites. From the Chicago-inspired perspective of these técnicos, Allende’s proposals amounted to an ignorant violation of the laws of the economy and the destruction of a free society.
✏️ Is the effort to “depoliticize” the economy just another way to ensure that socialism doesn’t take hold? After all, socialism encompasses a sense of democratic economy, and you can’t have that if you’ve trained people to separate the two. 🔗 View Highlight
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the morning after the coup, their 189-page economic program, El Ladrillo (The Brick) was on the desk of every major figure in the new government. It called for trade liberalization and tariff reductions; widespread privatization, including of social security; and a regressive value-added tax. In 1993, Harberger noted with satisfaction that this vision was now overwhelmingly accepted by all of Chile’s major parties, while at the time, the Chicago program was “too market-oriented, too open-economy, and too technocratic” even for the traditional Chilean right. Milton Friedman met with Pinochet to convince him that Chile’s economy required ‘shock treatment,’ primarily in the form of a drastic reduction in public spending.
✏️ The immediacy of neoliberal shock treatment and conversion 🔗 View Highlight
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the immediate effect was “severe recession,” as Chile’s GDP fell by 13 percent per annum.
✏️ Results of the shock approach:
- Chile’s GDP fell 13% per annum
- Purchasing power fell to 40% of its 1970 level
- Incomes and wages were reduced severely for the poorest
- Shares of national income in hands of upper 5% of income receivers rose from 25 to 50% 🔗 View Highlight
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What Friedman termed a “temporary transitional period” and Gunder Frank called “economic genocide as a calculated policy” was a deliberate attempt to strip Chileans of nonmarket social reproduction and force them to submit to the judgment of the market
✏️ The purpose of the shock approach.. to break people’s wills and bend them towards the market. 🔗 View Highlight
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Harberger later dismissed those who protested the junta’s repression, saying: “if you look at human rights violations or political violations, you will find them in any Asian country almost at that time, in multiples of whatever was happening in Chile.” Hayek told the right-wing Chilean newspaper El Mercurio that, while he did not support permanent dictatorship, he saw Pinochet’s “transitional dictatorship” as a “means of establishing a stable democracy and liberty, clean of impurities.”
✏️ The ability and propaganda of handwaving away human rights violations as “look over there.. they’re so much worse about it then here”, as well as the bananas title of “transitional dictatorship” as a salve to the idea of authoritarianism. 🔗 View Highlight
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In extolling Chile’s political miracle, Friedman argued that a free market, unlike a military structure, is typified by dispersed authority — “bargaining, not submission to orders, is the watchword.” But submission remained central to his account of the market. Economic pain (like physical torture) was designed to break the political subjectivities that led people to resist the “fate” doled out by the market.
✏️ What is said versus what is actually happening. They say free market is about dispersed authority, freedom and choice. What its actually about is submission to the all powerful market, and economic pain is designed to break any political subjectivities that might encourage people to resist the market’s machinations. 🔗 View Highlight
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neoliberal market, for which, as Michel Foucault has stressed, the central principle was not exchange but competition, with its systematic production of winners and losers. Weakening solidarity and creating competitive subjects was central to what Pinochet identified as the junta’s ultimate goal: “not to make Chile a nation of proletarians, but a nation of entrepreneurs.”
✏️ Highlighting that neoliberal markets aren’t about exchange but competition. 🔗 View Highlight
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“severe recession,” as Chile’s GDP fell by 13 percent per annum.
✏️ Effects of the shock approach:
- GDP fell 13% per annum
- Purchasing power fell 40% of 1970 levels
- the real incomes and wages of the poorest plummeted
- the share of national income in the hands of the upper 5 percent of income receivers rose from 25 percent to 50 percent 🔗 View Highlight
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What Friedman termed a “temporary transitional period” and Gunder Frank called “economic genocide as a calculated policy” was a deliberate attempt to strip Chileans of nonmarket social reproduction and force them to submit to the judgment of the market.
✏️ The intended effect: to break the people’s wills and bend them to the whims of the market. 🔗 View Highlight
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when a government is in a “situation of rupture,” it is “practically inevitable for someone to have absolute powers.” As the market is necessary to preserve freedom, when the market is threatened, society may temporarily be converted into an organization, and government may rule by decree. He would prefer a “liberal dictator,” he told the newspaper, to a “democratic government lacking in liberalism.”
✏️ Economists like Hayek, making a case for dictatorship. 🔗 View Highlight