Sebastián Edwards’ “The Chile Project” tells the story of the rise and fall of neoliberalism in a country condemned to be associated with that word. The model installed by the Chicago Boys, Chilean economists trained at the University of Chicago, in the Pinochet dictatorship (1973–1990) and deepened during three decades of democratic centre-left government created a capitalist economy. But growing dissatisfaction with neoliberalism’s inequalities came back to haunt the model in the social unrest of 2019. The complicated legacy of Chile’s free-market revolution is already the subject of numerous books and much opinionated commentary. “The Chile Project” is the latest addition, and the closest to a definitive historical account. But the closer to the present the book gets, the less it convinces and the more it contorts to fit the author’s personal view. An ambiguous figure, Edwards criticises neoliberalism in order to save it.
The 376-page book is part-economic history, part-intellectual history, part-political manifesto, and part-autobiography. Edwards follows an “analytical narrative” approach (p. 22), combining interviews, biographies, archival material, and statistics. An economist writing history, Edwards is able to simplify the thinking of his own discipline for a general readership. He also includes “personal experiences” (p. 23). These bring to life sketches of individuals and turning points, but his anecdotal style is ill-suited to academia. Especially since “The Chile Project” is not a memoir – that is available to readers of Spanish.1 These “personal experiences” (pp. 9–11, 60–62, 108–110, 165–171) also reveal just how close the narrator was to many of the characters and events in the book.
Edwards’ life is like an allegory for his country’s ideological struggles. He was “an accidental and atypical Chicago graduate” (p. 23). Edwards rejected his elite background to serve as a minor official in Salvador Allende’s doomed socialist government. After the coup, he studied under, worked for, and was then chased out of Chile by the Chicago Boys. Ironically, Edwards’ long exile began at their alma mater. After graduating, he remained in the US, becoming a renowned economist at the University of California, LA (UCLA) and the World Bank specialising in the macroeconomics of developing countries. With his career coming to an end (Edwards turned 70 in the year of publication), the subject he had avoided for so long finally caught up with him. “At times I think that I have been working on this book for my whole professional life,” he admits in the acknowledgements (p. 279).
The story is told chronologically and follows a clear narrative arc. Parts I and II chronicle the rise of neoliberalism, part III its presumed fall. The book makes good use of, but also breaks with conventional periodisation to show how the model changed over time, reaching its peak in the 1980s and 1990s.2 There are six phases: the ivory tower years (1955–1975, chapters 1–3); incipient neoliberalism (1975–1982, chapters 4–8); pragmatic neoliberalism (1982–1990, chapters 8–9); inclusive neoliberalism (1990–2006, chapters 10–11); and the decline of neoliberalism (2006–2022, chapters 12–16).
Edwards’ account distinguishes itself from the field by sorting out the many ideas that belong to Chicago-school economics. He does not, however, question the notion that these ideas spread from the Global North to the Global South. His definition of neoliberalism as, “the marketization of almost everything”, disregards relevant literature, but incidentally reaches a similar conclusion (p. 14).3 The word almost implies a limit to markets, rather than anti-state libertarianism, and differences emerge over where the limit lies. The definition suits his purposes, namely grouping Chicago-school thinking into “purer neoliberals” and “pragmatist neoliberals” (p. 19). In Chile, the rift was between the “dogmatics” and the “flexibles” (p. 135). Much has been made of purer neoliberal Milton Friedman’s influence in Chile – including one short meeting with Pinochet in 1975 that supposedly persuaded the general to opt for the Chicago Boys’ shock therapy programme. Edwards instead argues that the pragmatic Arnold Harberger was more persuasive in developing countries. Frustratingly, he then contradicts himself – here and in another text – by presenting the Pinochet meeting as the turning point in Chile’s economic history: “there is a before Friedman and an after Friedman” (p. 97).4 The mistakes in this book are in the detail, but thinking of the Chicago-school as a family of ideas still holds up.
There were other varieties of neoliberalism in the country. They did not belong to the US State Department’s “Chile Project”, which gave the name to this book. As a consequence, they are either missing, Chicago Boys “by proximity”, or “honorary” members of the club (p. xx).
Edwards does not shy away from the big historical questions. He is convinced that market reforms at this particular moment could not have gone so fast or far under a democratic government. The Chicago Boys’ power was never absolute. The military junta were the ultimate decision-makers. Edwards points out that the Chilean economic miracle happened under the democratic centre-left governments of the Concertación, critics of neoliberalism who – in the author’s opinion – perfected the dictatorship’s model. He is therefore careful to separate the miracle from its “original sin”, an authoritarian regime that committed human rights abuses (p. 2).
The second part of the story makes narrative sense, but it begs a rather obvious question. Have we really seen the fall of neoliberalism in Chile? For Edwards, the protests of 2019 marked a break with the past and the coming of European-style social democracy. But after two failed attempts at a constitutional re-write, the country has had to revert back to its amended version of the dictatorship-era constitution. Given how events turned out, should Edwards have delayed publication? Not if one sees the book for what it is: a political intervention in the constitutional debate in defence of a reformed neoliberalism.
Far from being “certain”, as Edwards asserts, it is too early to tell whether the neoliberal era is over (p. 8). “The Chile Project” thus repeats the mistake of Pinochet’s Economists, the book it had hoped to replace.5 And in looking for the kind of clean break that defined Chilean history in the twentieth century, Edwards ignored the possibility that a transition towards and away from neoliberalism can be slow, inadvertent, and built on what came before.
The truly puzzling question, which the narrative structure distracts from, is the “Chilean paradox” (p. 233). Why was there such disenchantment with the model, when according to indicators the country had become a developed nation and was a success in comparison to regional neighbours? Edwards recognises problems in the pension system and with persistent inequality. But in using the language of a paradox, he does not fundamentally challenge his underlying assumptions. Rather, free marketeers should try to bring perceptions in line with reality.
From the outset, Edwards regards what happened in Chile as part of an ongoing global “war of ideas” between planning and markets and he returns to this framing in the conclusion (p. 18). The Chicago Boys were victorious in persuading opponents, but “success” was followed by “neglect” (p. 270). The book ends with a warning. If the neoliberals do not preach, “Chile will be where it was for most of the twentieth century: in the middle of the Latin American peloton” (p. 278).
“The Chile Project” is a story about more than one country. Edwards wants “to extract useful lessons for policy-makers from around the world” (p. 279). That makes the book not only relevant to scholars of Chilean and Latin American history, but also students, researchers, and a general non-academic readership interested in economic ideas and political economy in the late 20th and early 21st centuries. Chile was at the forefront the global turn to markets starting in the 1970s that has shaped the world we are living in today. That historical pattern has not yet repeated itself in reverse.
Notes:
1 Sebastián Edwards, Conversación interrumpida. Memorias, Santiago 2016.
2 Ricardo Ffrench-Davis, Economic Reforms in Chile. From Dictatorship to Democracy, Ann Arbor 2002.
3 Thomas Biebricher, The Political Theory of Neoliberalism, Stanford 2019; Quinn Slobodian, Globalists. The End of Empire and the Birth of Neoliberalism, Cambridge 2018.
4 Sebastián Edwards / Leonidas Montes, Milton Friedman in Chile. Shock Therapy, Economic Freedom, and Exchange Rates, in: Journal of the History of Economic Thought 42 (2020), pp. 105–132.
5 Juan Gabriel Valdés, Pinochet's Economists. The Chicago School of Economics in Chile, Cambridge 1995.