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Cementing Neoliberalism
Introduction
The free-market model launched by the military regime in the mid-
1970s was not only an economic program of market liberalization
and integration with the global economy. It was also an attempt to
introduce a new set of values and to change the culture of Chilean
society. It amounted to a cultural revolution. This new utopia was
built around an idealization of the free market, the promotion of an
individualistic ethic, the legitimization of the proit motive extended
to a vast array of new activities (education, health, pensions, roads
use). The new view also held a hostile (or at least reluctant) attitude
toward the traditional roles of the state as a producer, regulator, and
redistributing agent.
Cultural revolutions to support emerging economic or political rev-
olutions are not new in history. In the 1960s, the Chinese leader Mao
Tse-tung launched a cultural revolution to subvert what he considered
remaining individualistic values and counterrevolutionary tendencies
in party leaders and state oficials and to remove remaining “capitalist
attitudes” in the population. Mao’s Cultural Revolution was oriented
toward both consolidating his own personal power and creating the
value and cultural base supportive of a highly egalitarian, communist,
and communal society.
In the new Chilean economic order, led by the unrelenting pursuit
of proits, there was little room for active labor unions, social move-
ments, and state protection of social rights. A new cultural hegemony
was needed.
39
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40 Chile and the Neoliberal Trap
1
See Kaletsky (2010) and Harvey (2010).
2
The inancial crisis of 2008–10 is leading to a questioning of this paradigm. Neoclassic
theory originated in the works of Jevons, Bentham and Mill, Alfred Marshall, and
Wilfredo Pareto, who assumed that people act in an individualist manner looking to
achieve their maximum level of utility and satisfaction.
3
For further critical discussions of these motivations, see Marglin (2008), Quiggin
(2010), Sen (2009), and Jackson (2009).
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Cementing Neoliberalism 41
In Chile, like in other nations, the spell the “invisible hand,” devel-
oped by the Scottish philosopher and economist Adam Smith – in
which the pursuit by each person of his or her individual interest
(proit or utility) would be compatible with the harmonious well-
being of society as a whole and with overall market eficiency – has
certainly been inluential in the legitimization of the free market.
How to square this hypothetical construct with the daily evidence
that markets and working conditions in real-world capitalism are
plagued by the effects of asymmetric information, routine abuse of
the consumer, nonprice considerations, alienation in the workplace,
advertising-induced overconsumption, monopolistic practices, and so
on is an open question.4
The promotion of an idealized free-market vision by the media, the
universities in their training of students, and the discourse of public
intellectuals and commentators has led to the emergence of a new
common sense apparently dominant in Chilean society, albeit criticism
of the (neoliberal) common sense is appearing around the question-
ing of the proit motive and the charge of high fees in universities,
among other issues. In fact, the ideology of the free market collides
with the cultural tradition of Chile, strongly inluenced by the teach-
ings of the Catholic Church5 and other religious denominations as well
by civil-society organizations, schools, and political parties that his-
torically have encouraged social behavior oriented toward collective
projects of different natures, such as social solidarity, charity, deliv-
ery of social services, community organization, and progressive social
transformation.
4
As is well known, Adam Smith was a professor of moral philosophy at Glasgow
University in the eighteenth century who wrote about ethical and moral topics and
their inluence on human behavior. See A. Smith (1759 [2007]). It is apparent that
Adam Smith’s real vision was more nuanced and complex than suggested by his later
popularity (somewhat similar to what happened, from another perspective, with Karl
Marx).
5
The topic of the moral basis of capitalism has always been present in the social
thought of the Catholic Church and is relected more recently in the writings of popes
John Paul II and Benedict XVI. Even Pope Benedict XVI has cited the concept of
alienation in Marx. The Vatican has been traditionally suspicious of the moral conse-
quences of capitalism (and communism) because of the disruptive effects on values
and the family inherent in economic systems based on the search for proit, individu-
alism, and self-realization through material consumption.
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42 Chile and the Neoliberal Trap
6
For a philosophically oriented treatment of the issue, see Wolff (2003). An economist’s
perspective is provided in Foley (2006).
7
See Hobsbawm (2011).
8
See Forgacs (1988).
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Cementing Neoliberalism 43
9
See Polanyi (1944), Bell (1976).
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44 Chile and the Neoliberal Trap
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Cementing Neoliberalism 45
Cultural Contradictions
Daniel Bell in his classic book The Cultural Contradictions of Capitalism
argued that, while capitalism was able to bring an unprecedented level
of material progress and leisure opportunities, the system also encour-
aged high consumption levels, thereby weakening the drive for savings,
thrift, capital accumulation, and delayed gratiication, features required
for productive capitalism to strive and lourish. In addition, Bell also
stressed that capitalism in its drive for expansion and “marketization”
of all activities alters and dislocates social relations, shattering the
requirements of stability, predictability, and security that people want
at personal and familial levels. According to Bell, these are the main
cultural contradictions that any capitalist society has to deal with.
Both Polanyi and Bell emphasized that the structure of values,
social norms, and culture in society is very important for moderating
the negative impact of the free market and unbridled capitalism on
social cohesion, the family, the community, and the environment.11
10
The newly democratic governments that followed the military regime were also
apparently afraid of the social movement and labor unions that reemerged in the
1980s and contributed decisively to the social and political dynamics that eventually
led to the departure of the authoritarian regime. The center-left governments encour-
aged a sort of consensus politics with the center-right political parties rather than
seeking alliances with labor unions, student movements, and a plethora of other civil
society organizations empowered by the end of the authoritarian regime. A practice
of social demobilization, conformism, and elitist politics ensued.
11
Culture and ideology are important supportive and reinforcing elements of any social
order, as emphasized by Marx and Gramsci, among others.
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46 Chile and the Neoliberal Trap
12
The argument Hirschman uses is a variation of a topic that comes from Aristotle,
picked up by the philosopher Hannah Arendt in her book The Human Condition. In
that book, the author elaborates on the distinction between “active life” and “contem-
plative life.” The active life could be the dedication to public matters or to commerce
and industry. The contemplative life, which Greeks gave a higher value, was dedicated
to the cultivation of science, art, and knowledge.
13
The 1960s and 1970s witnessed big waves of collective action: the “French May,” the
“Italian hot autumn,” the “Prague spring,” the Mexican student activism (and its
later repression) previous to the Olympics games, and others. In addition, we ind
the paciist movement in the United States against the Vietnam War in the 1960s and
the drive for social reform and social change in Latin America and other countries.
These movements may be characterized by a greater inluence, compared with other
decades, before or after, of collective action around certain utopian ideas and social
projects. A “market motivation,” with the pursuit of self-realization through private
activities and material well-being, may describe better the motivations dominant in
the decade of the 1990s and 2000s in several countries associated with the eruption
of free-market economics and neoliberalism. Naturally, in any historical period, both
types of motivations (collective action and individualism) mix and overlap.
14
In the earlier reasoning given for changes to individual activity dedicated to the pri-
vate and public area lies the postulate that the structure of values and preferences can
change over time. This is in contrast to the utilitarian theory, which supposes stability
and exogeneity of these preferences.
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Cementing Neoliberalism 47
15
Another motivation for public action may be more mundane and lies in the search for
power, with the prestige and privileges that holding power positions entails. In con-
trast, private-oriented motivation in relation to production, accumulation of wealth,
and consumption is emphasized by the utilitarian theory and neoclassic economics.
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48 Chile and the Neoliberal Trap
16
In the political context of the new democracy, apparently subscriptions by the public
were not enough to keep these media alive.
17
See Mönckeberg (2009).
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Cementing Neoliberalism 49
Concluding Remarks
The economic transformation into a free-market economy is not only
a technocratic exercise of aligning relative prices, exchange rates, bud-
gets, taxes, and so on but also a cultural and ideological transformation
to enable a society to accept working according to the proit motive and
dominant private property. This chapter explored the role in the legit-
imization of the free market of various “cultural” mechanisms such as
universities teaching neoclassical-neoliberal economics and the mes-
sages transmitted by the mass media and public intellectuals toward
building a new “common sense” necessary for an unrelenting capitalist
economy. The extension of the market to social sectors and other ields
reveals the attempt to build a market society, in the terminology of
Karl Polanyi, in Chile. The movements to introduce this market soci-
ety by the military and its further consolidation and attempted legit-
imization in democracy is documented. The chapter also highlighted
the cultural and social response and resistance of the student move-
ment and civil society, labor unions, and grassroots organizations to
the proit motive and the retreat of the state in education and other
ields that has been recently observed in Chilean society, as well as the
dificulties in enforcing a market society in unequal countries.
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