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Economic Genocide in Chile: Open Letter to Milton Friedman and Arnold Harberger
Andre Gunder Frank
Economic and Political Weekly
Vol. 11, No. 24 (Jun. 12, 1976), pp. 880-888
Published by: Economic and Political Weekly
Stable URL: http://www.jstor.org/stable/4364704
Page Count: 9
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This is a critique, written in the form of an open letter, of the economic policies of the military Junta in Chile. The Junta's economic programme consists of freeing almost all prices to raise them several-fold to 'world levels' and increasing the money supply concomitantly. A 'free' capital market is fostered as well, which beyond concentrating capital into conglomerates also creates its own financial instruments above and beyond the control and even the accounting of the state, and which at the same time increases the amount of monetary means of payment and their velocity of circulation. Both of these 'freedoms' generate a runaway inflation whose consequences, and intended effects, are to shift income and wealth from labour to capital and from smaller to bigger capital. Fortifying the same process to the same effect still further, 'freedom' must be promoted by destroying or yellow-dog-co-opting the organisation of labour and eliminating its bargaining power, and through all means preventing money wages from keeping pace with inflation in both private and public employment. In short, real wages are drastically reduced by bringing prices but not wages to 'world' levels. At the same time, the state divests itself of state sector enterprises at bargain basement prices to Chilean and particularly to foreign big capital, doing so not only with enterprises that became state-owned or controlled under the Allende government, but also with enterprises that had been financed through state investment for over a generation. Similarly, a crash programme of agrarian counter-reform is instituted and some 2 million hectares of land expropriated during the Allende and Frei administrations is returned to their former owners and/or to new capitalist owners, while repressing and exploiting the peasantry and rural labourers even more brutally than the urban population. Not only wages but also employment and expenditures in the public sector are cut back and much of the most advanced social security and public health system of Latin America (outside of Cuba) is turned into a private pay-as-you-go business. In the 'external' sector, there is repeated devaluation, tariffs and other import restrictions are relaxed and every kind of favour is extended to foreign capital, including payments to the American copper companies in excess of the values of their former properties. The balance of payments is redressed by reducing imports of goods necessary to meet the essential consumption needs of the population, while exporting manufactures and even food products that the consumer's reduced purchasing power no longer permits them to buy. Production is restructured and investment is redirected to permit the still greater promotion of 'non-traditional' exports of food, raw materials and manufactures at the expense of the Chilean consumers, whose most essential needs are sacrificed more and more by an intentional, calculated and forcibly imposed policy of economic genocide.
Economic and Political Weekly © 1976 Economic and Political Weekly