Bonefeld on Primitive Accumulation.

Good talk from Wener Bonefeld on Primitive Accumulation and Class

reificationofpersonsandpersonificationofthings

Here’s a video of Bonefeld’s talk at Delavsko-punkerska univerza on ‘Primitive Accumulation and Capitalist Accumulation:’

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Bonefeld– ‘From humanity to nationality to bestiality: A polemic on alternatives without conclusion’

reificationofpersonsandpersonificationofthings

A Bonefeld talk at Glasgow with a most excellent title can be found right here.

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Werner Bonefeld: The Nature of the Bourgeois State

Academic and renowned Open Marxist Werner Bonefeld gives an excellent talk on the nature of the bourgeois state. The talk highlights several key concepts and understandings of the bourgeois state noting people such as Adam Smith and Karl Marx.

A critical assessment of the impact of Neoliberalism on the Chilean State during the Pinochet regime (1973-1989)

Salvador Allende roused much of Chile’s populace with his radical reforms

The principle aim of this essay is to assess the impact neoliberalism had on the Chilean state during the Pinochet regime. The main intentions are to do two things, firstly analyse and understand what is meant by neoliberalism and secondly relate this to a specific regime and period. The essay is not aiming to produce pure abstract economic details of neoliberalism but rather present it as a political and theoretical concept of how a state and society is organised. Assessing this will deal with the impact of neoliberalism on the Chilean state and society. This is due to the belief that to understand a concept and its impact one cannot simply deal with GDP levels and inflation rates but rather analyse it with regards to the everyday life of the state’s inhabitants. In essence, the aim is to present both approaches as the best way of understanding the impact. The first section will define neoliberalism firstly with a broad outline and then with specific reference to Monetarism, Milton Friedman and the Chicago School, whose ideas were of major importance to Chile. Having done this the essay will move onto look at the Allende government from 1970-1973. This is necessary as a model of comparison to the Pinochet regime, the Allende government is best suited not only for its radical differences but it also directly preceded the regime. With this, the essay will then analyse the impact noting the political ramifications and then assessing it in relation to Chilean society. The essay will finish with a brief conclusion, which will provide a strong criticism of the policy of neoliberalism on the Chilean state.

Neoliberalism is conventionally seen as the emerging economic model associated with the collapse of the Bretton Woods’s system of fixed exchange rates in the early 1970’s[1]. Its history goes further back than this; the German scholar Alexander Rustow first used the term itself in 1938[2]. Rustow was at a conference with several other academics and economists who defined the term as “the priority of the price mechanism, the free enterprise, the system of competition and a strong and impartial state”[3]. It was formulated as an addition to traditional Laissez-Faire economic models, which were seen as not doing enough to combat the problems of capitalism in the early 20^th century; it is therefore not to be seen as separate from liberalism but an extension and modification of it[4]. Its importance though rests with its influence and then adoption by various economic schools during the post Second World War period and later by several governments; both the Austrian School and later the Chicago School were inspired and informed by this approach[5]. It was during the 1970’s and 1980’s that the term became a reality so to speak, this following the liberalisation of markets and the emergence of finance capital[6]. It is characterised by a belief in market efficiency, privatisation of state enterprises, entrepreneurialism, property rights, individual freedom and an attempt to reduce national Debt[7]. Most of these aims and policies were in direct response to those of the post-war economies which were characterised as Keynesian and by the opposites of the above, state-led enterprises and full employment in favour of national debt. Crudely put economic activity shifted from the state controlled public sectors to the private sectors by this process. The rhetoric used and its implementation has often led to neoliberalism being characterised as anti-statist or working towards a weak state[8]. The state is no doubt seen as inefficient in relation to economic activity but its role remains firm as the guarantor of economic freedom, as Bonefeld notes ‘the free market requires the strong, market facilitating state, but it is also dependent on the state as the coercive force of that freedom’[9]. The principal concern of the state must be seen in relation to preserving and protecting economic freedom from coercive forces. In essence, it is clear to see that neoliberalism is not anarchism, it does not reject the state outright, and it merely wishes to reduce its role in relation to the economic sphere. Thus, the characterisation of neoliberalism as outright anti-statist should be rejected, and instead seen in specific relation to classic liberal economics regarding individual property rights. The idea mainly relates to a distrust of the state, if it is given too much power it will become susceptible to corruption and influence from forces that benefit from its intervention. This has the effect of undermining the primacy and perceived efficiency of the market and individual private property rights to which liberals and neoliberals adhere.

The Chicago School are one of several schools associated with neoliberalism; their importance for this essay is that they were active in Chile during the Pinochet regime. The Chicago School are characterised by a belief that markets work better than the alternatives as a means of organising society[10]. There is a view of private property as sacrosanct and the state ought to be noninterventionist and allow market forces to dominate[11]. Milton Friedman is often seen as the leading figure of the school and is usually associated with neoliberalism. Friedman was not your average economist; he was very much an activist in respect to his profession. Friedman did not believe economics should be reduced to abstract mathematics but rather an engine of analysis for addressing real problems[12]. Friedman propounded an economic theory called Monetarism; it is generally characterised by the need to maintain monetary stability in order to maintain the smooth operation of the market[13]. Though Monetarism would later be seen as an alternative to Keynesianism, it was in reality an addition in its early formulations, Friedman himself had been trained as Keynesian and certain ideas regarding employment equilibrium were a feature of his early work[14]. What did distinguish Monetarism from Keynesianism was its reassertion of classical economics particularly regarding ideas around individual freedom as opposed to state intervention[15]. As Clarke notes ‘State intervention not only undermines the freedom of the individual to decide how best to allocate his or her resources, but also necessarily undermines the incentives on which the dynamism and efficiency of capitalism depends’[16]. Monetarism would then appear as much ideological as it is economic; it presented not only an alternative to the financial crisis of the 1970’s but it proposed a radical new vision for society (Though they were based on old ideas). It is little wonder that politicians such as Reagan and Thatcher embraced it, in political terms it appeared a very credible alternative to Keynesianism. Of course, the economic credentials of Monetarism were always in doubt as will be shown in relation to Chile further on in the essay. That said there is little doubt that Monetarism and thus Neoliberalism represent a very radical model of society that is focused upon the primacy of the individual contained within classical economics, politically it was utilised as a response to Keynesian inefficiencies and thus propagated a new vision and idea of the state and society.

The essay will now turn to the government of Salvador Allende and its brief period of power. The 1970 election of Salvador Allende in Chile was a major event in world politics and its repercussions are still felt to this day particularly in Latin America[17]. It was the first time an open Marxist had gained a presidential election victory in the Western hemisphere[18]. The victory in itself was monumental but it was the nature of the Allende government that is important for this essay. Allende was elected on a radical basis for political and economic change mainly around issues such as property relations, land reform and the management of industry[19]. The Unidad Popular (UP) (Popular Unity) programme was quite specific in its aims regarding such reforms, the socialisation and nationalisation of industry, increased expropriation of agrarian land and a massive programme for social welfare[20]. It is important to note that these were not mere populist demands but rather an attempt at a fundamental power shift within Chilean society[21]. The election of Allende thus represented a clear mandate from the Chilean people regarding their future and the management of the state.

As noted the main areas of reform were centred on land reform and industry, the UP’s first major step in this respect was the nationalisation of the US owned copper mines[22]. This proceeded quite uneventfully in comparison with later reforms and was seen as a high point of Allende’s tenure. The reasons the bill passed so easily was mainly due to right-wing disunity, popular sentiment and support from the liberals[23]. It was due to these factors that during 1971 UP were able to further nationalise several industries, expropriate large swathes of private land and introduce popular social reforms. Amongst its supporters, the reforms were very popular and UP increased its majority in the municipal elections of 1971[24]. The impacts of these reforms was major, Allende and UP were committed to a massive increase in the role of the state sector, they hoped that through this, political power relations could be changed in the country. As such they were banking on people being receptive to such changes and encouraged active participation through syndicates and people’s councils, Allende claimed this was the creation of the ‘State of the masses’[25]. The role of the state would seem to be not only economic management but also a tool for political change, such sentiments are not unusual but in the case of UP they were sincere given the work they did during their three years in power. By 1973 there were 370 state enterprises compared with 43 in 1970[26], add to this the mass expropriation of land and the major increases in social welfare and education and it is safe to assume that Chile had undergone massive changes in three years. The state had become the largest employer and its role has changed dramatically from that of previous governments.

It was of course the utilisation of the state and its role that would lead to Allende’s downfall. The September 11^th coup by Augusto Pinochet was a response to everything UP had stood for and implemented, it was the culmination of three years of misery for the right in which the state had become the force to undermine their authority. The attacks upon private property by the government would not go without a reaction from those who had an interest in maintaining them. The mobilisation of the opposition coincided with mass political polarisation and an economic crisis.  The crisis was caused for several reasons including external pressure from the US and World Bank, internal splits within the UP and the repercussions of its economic policies, which had resulted in a rise in inflation due to Chile’s public expenditure[27]. The UP in its pursuit of parliamentary revolution had in fact paved the way for revolution from the right who were never going to allow such a transformation to occur without a struggle. The UP programme like many before it had sown the seeds of its own downfall; it had failed to see the fundamental contradictions of its approach in relation to the state. By utilising state intervention on a mass scale, it had failed to take into account that sustained accumulation through the state intensified political polarisation and class struggle[28]. The state was not only problematic in relation to Chile’s economic polices but also it became the focal point of hatred for the right and opponents of Allende who saw his use of it as being unfair.  As was noted the right had alot in its favour and with its victory, it set about not just regime change but a fundamental change in Chilean society.

The essay will now turn its attention to assessing the impact neoliberalism had on the Chilean state during the Pinochet regime. The initial and immediate aim of the military coup was to stop any further attempts at social transformation; the perception was that the Allende government had gone beyond the realms of what was acceptable in the eyes of its opponents[29]. There was as such no long term strategy with regards to structure and the role of the state, the most important immediate aim was the repression of its ‘enemies’, as a prerequisite of establishing a new order[30]. With its opponents deposed, the regime began to set in motion numerous reforms, although Pinochet initially ignored the advice given to him by the economists at the Catholic University (The Chicago Boys), he later came to adopt them[31]. The reason for this was not simply a case of the Chicago boy’s having direct influence over Pinochet or even that all agreed that their ideas were best suited to the situation (There were many who did not[32]). The reason for their adoption was the specific political implications the model they proposed would have on the Chilean state[33]. Again it is important to note the particular ramifications that neoliberalism has on states; it is not just an adoption of an economic model but rather a profound change in the order and makeup of a society. As Taylor notes ‘the attractiveness of neoliberalism was its professed ability to reshape Chilean society[34]’, the goal then is not merely economic reform but the establishment of a new idea of society. The model not only offered a solution to the economic crisis but also a move away from the state enterprise models of the past. This option must have seemed too alluring to turn down, and from 1975 onwards the regime moved towards full adoption of the model. The declared central tenets of the new model were strict monetary control, opening of the market to international trade, liberalisation of capital markets, privatisation of state assets and the orientation of the market towards increased exports as opposed to internal industrialisation[35]. As Barton notes ‘within a five year period (1970-1975), the Chilean economy shifted from a command economy to neoliberalism,’[36].  The military junta was fundamental for such a process to be realised, the harsh repression had effectively allowed the measures to be implemented with little resistance and with the banning of trade unions labour was very flexible with regards to low wages and discipline[37]. As such Chile became a haven for multinationals willing to invest and exploit such conditions along with domestic economic groups. As one would imagine this brought about a major change in Chilean society and was dubbed the ‘Chilean Miracle’ by several economic observers including Friedman. It was labelled in such a fashion due to inflation falling to zero in 1980 and flows of capital in the country were at an all-time high[38]. However, within two years of this Chile was in the grip of a major financial crisis that was in many ways a repeat of the 1973 crisis of the Allende government. The crisis put an end to the naivety of the initial period, which had led to an incredible amount of credit borrowing from abroad, which had effectively created a bubble, which caused many to eventually default[39]. The Chicago Boys and the regime had been incredibly naive and in their pursuit of liberalisation, they had undermined regulation and refused to acknowledge the need for a balanced economy in favour of short-term profit. The model itself was not done away merely refined with the state once again coming to the rescue of the numerous privatised institutions that had caused much of the problems. Pinochet moved towards a more stable model and installed new technocrats into ministerial posts that took a more precautious line and brought about a stronger balance to the economy. The second period as it would become known still persisted with large-scale sale of state enterprises after the crisis had waned; the sales though became more concentrated in a few multinationals rather than a broad array as before.

The Pinochet regime was twice labelled a miracle in relation to its economic management and affirmation of neoliberal ideals. One of the major consequences of the model was to place a large concentration of wealth in the hands of the few and increase the disparities between rich and poor[40]. Nobody can doubt that Chile had ever been a bastion of equality, even during the Allende period mass inequality still existed. That said under the dictatorship things undeniably became more polarised regarding wealth and inequality[41]. Indeed despite being dubbed the second miracle in 1988 Chile had averaged 17% unemployment peaking at 30% during the recession and wages were around the same as 1956 levels[42]. Per capita income was only 8% above the 1971 rate and the average GDP growth rates of 3.4% were below those of previous governments[43]. The numerous modernisations that took place under the regime would have a profound effect on the people of Chile. The miracle must be viewed within the wider socio-economic context particularly regarding the lower classes. As Barton notes ‘Chile retains a large social sector of marginalised urban and rural poor who have seen little or nothing of the fruits of the last quarter century of development’[44]. Economic reforms did not coincide with any semblance of improvement of social conditions for large swathes of the Chilean populace. The regimes attempts at social policy were run by top down technocrats who managed the situation with no intention of involving those they were allegedly seeking to help[45]. It also concentrated on specific sections of the populace rather than the whole; as such, vast swathes of people were simply ignored and left to fend for themselves. Perhaps the most telling impact was the complete destruction of employment rights and labour freedom during the regime[46]. Neoliberalism is characterised by its distrust of trade unions and labour organisations, in the Chilean context this can be seen in its extreme form, not only were rights completely removed but also low level wages were a consistent feature of the regime[47]. The rights of the working classes it would seem do not come under neoliberalism and its commitment to freedom, indeed the whole ideal would seem to want to undermine such provisions. For a regime, which claimed to be reacting against the unfair utilisation of the state against individual rights and private property, it seems ironic that it should be characterised as one, which completely perverted the rights of workers in relation to their employers. Indeed when economists talk of the Chilean miracle do they acknowledge the impact that a harsh and brutal enforcement of low wages and labour discipline has on such a performance. Do they notes figuresthat show in 1990 44.4% Chileans were living in poverty compared with only 20% in 1970.

Neoliberalism’s effect on Chile has been monumental, it transformed the country and it is safe to say the Chilean state will never be the same again. Its impact is best assessed as one that benefitted a few at the expense of the many. How a regime that presided over a 40% level of poverty can be viewed as a miracle may seem strange but it is entirely in line with the priorities of those who expound such views. Certain classes are benefitting, the economy is stable, profits are up and Chile is faring well on the world market. This idea of a miracle comes at the expense of a large proportion of the populace, as such, it is a miracle but only for certain groups, there is no denying that people benefitted from the implementation of neoliberalism but at the expense of others. The term itself could be seen as a crude piece of class bias and there is no denying that certain classes benefit alot more from neoliberalism. Yet while it claims to stand for freedom and liberal values, perhaps, what is most disturbing about neoliberalism is that its proponents did not mind utilising a brutal dictatorship to implement their reforms upon the Chilean state and its people. The ends it would appear do justify the means so as long as the ends are what a certain group of people want. The impact of neoliberalism on Chile can be seen then as a timely reminder of the depths self-proclaimed liberals will go in order to realise their ideal society, one in which those at the bottom can gain little while those at the top can gain everything. This in itself is the impact neoliberalism had on Chile during the Pinochet regime.

 

Bibliography

Barton, J. (1999) Chile, in Buxton, J. and Phillips, N. (editors) Case studies in Latin American Political Economy (Manchester, Manchester University Press) pp.62-82.

Bonefeld, W. (2010) ‘Free Economy and the Strong State’, Capital and Class, vol. 34 no. 1. (London, Sage Publications) pp15-22.

Clarke, S. (1988) Keynesianism, Monetarism and the crisis of the State (Aldershot, Edward Elgar Publishers).

Landreth/Collander (1994) History of Economic thought, 3^rd edition (London, Houghton Mifflin).

Maloney, W.F. (1997) Chile, in Randall, L. (editor) The Political Economy of Latin America in the Post-war Period (Austin, University of Texas Press) pp.22-70.

Mirowski, P. and  Plehwe, D. (2009) The road from Mont Pèlerin: the making of the neoliberal thought collective (Harvard, Harvard University Press).

Oppenheim, L.H. (1993/1999) Politics in Chile: Democracy, Authoritarianism, and the search for Development, 2^nd edition (Oxford, Westview Press).

Petras, J. (1999) The Left Strike Back: Class Conflict in the Age of Neoliberalism (Oxford, Westview Press).

Roxborough, I. O’Brien, S. Roddick, A. (1977) Chile: State and Revolution (Basingstoke, Macmillan).

Taylor, M. (2006) From Pinochet to the ‘Third Way’ Neoliberalism and Social Transformation in Chile (London, Pluto Press).

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[1] Bonefeld p.15 2010

[2]  Mirowski/Plehwe p. 13-14 2009

3  Mirowski/Plehwe p. 13-14 2009

[4] Mirowski/Plehwe p.14 2009

[5] Mirowski/Plehwe p.14 2009

[6] Bonefeld p.15 2010

[7] Taylor p.35 2006

[8] Bonefeld p.15 2010

[9] Bonefeld p.15 2010

[10] Landreth/Collander p.433 1994

[11] Oppenheim p.141 1999

[12] Landreth/Collander p.434 1994

[13] Clarke p.323 1988

[14] Clarke p.324 1988

[15] Clarke p.327 1988

[16] Clarke p.327 1988

[17] Oppenheim p.53 1999

[18] Taylor p.23 2006

[19] Oppenheim p.46 1999

[20] Taylor p.25 2006

[21] Taylor p.25 2006

[22] Oppenheim p.54 1999

[23] Oppenheim p.54 1999

[24] Taylor p.27 2006

[25] Taylor p.25 2006

[26] Oppenheim p.92 1999

[27] Roxborough/O’Brien/Roddick p.139 1977

[28] Clarke p.304 1988

[29] Taylor p.31 2006

[30] Taylor p.31 2006

[31] Maloney p.50 1997

[32] See Taylor 2006, there were many who preferred a more Keynesian style approach but not on the level of Allende.

[33] Taylor p.50 2006

[34] Taylor p.51 2006

[35] Barton 67 1999

[36] Barton p.66 1999

[37] Barton p.67 1999

[38] Maloney p.53 1997

[39] Taylor p.53 2006

[40] Oppenheim p.143 1999

[41] Oppenheim p.143 1999

[42] Maloney p.53 1997

[43] Maloney p.53 1997

[44] Barton p.72 1999

[45] Barton p.72 1999

[46] Barton p.72 1999

[47] Barton p.72 1999