Neoliberal economists known as the Chicago Boys successfully reconfigured Chile’s national economic policy during Augusto Pinochet’s government. These Chilean economists were trained at the Department of Economics of the University of Chicago, under the influence of the free-market, monetarist school of Milton Friedman and Arnold Harberger. The Chicago Boys, possessed of a sense of mission, championed drastic reduction of the public sector in Chile, minimal state intervention in the economy, restrictive monetary policies, and the encouragement of foreign investment. This contrasted with the import substitution and industrialization patterns prevalent during most of Chilean history.
Juan Gabriel Valdés, an adviser to the minister of finance in Chile and the chief coordinator of negotiations for Chile’s access to the North American Free Trade Agreement, analyzes at length the academic success and the transfer of ideas that led to the restructuring of economic policies in Chile by examining the training received by these influential economists at the Catholic University in Santiago and at Chicago. Although their economic policies brought inflation under control and led to economic growth, Valdés stresses the negative effects of these drastic measures.
Based on his dissertation, this thoughtful analysis represents exhaustive research, especially regarding the role played by the Catholic University and the newspaper El Mercurio. It seems, however, that Valdés did not focus sufficiently on the middle sectors’ reaction to the attempt by the Chilean Left to revolutionize Chilean society and economic policies in the early 1970s, which certainly made these influential sectors more cautious and more receptive to a drastic reduction of the state’s role in economic policy. With the return to democracy, Valdés maintains, “the economists in Chile’s democratic government have made efforts to distance themselves from the set of theoretical limitations and ideological reductionism that so vividly characterized the Chicago Boys’ experience under the authoritarian regime” (p. 276).
No doubt the influence of the Chicago School in Chilean economic policy still plays an important role, and has been widely imitated in other Latin American countries. This account is an authoritative and important addition to contemporary Chilean economic history.