Why should historians of economic thought take an interest in Chile? The reason is that the country has been the laboratory for a controversial experiment in free-market economic policies since the early 1970s. That experiment involved the brutal dictatorship of Augusto Pinochet and Chilean economists trained at the University of Chicago, the so-called Chicago Boys who were influenced by Milton Friedman.
The basic story is this. In 1973, economic chaos under Marxist president Salvador Allende helped spark a military coup. Suddenly vaulted into positions of power, the Chicago Boys persuaded Pinochet to impose shock therapy to reduce inflation and introduce free-market policies more generally. After the return of democracy in 1990, the free-market model was continued by left- and right-of-center governments because the policies were broadly successful. Chile experienced strong economic growth and declining poverty, eventually achieving the highest per capita income in Latin America. Yet the policies were never...
