1983 - 1989: FROM PROTEST TO CONCILIATION
By David Fuentes and Samuel Rojas
Published in the July-September 1989 edition of CHILE VENCERA
Six years have gone by since the waves of anti-dictatorship protests began in 1983. Much has happened since. Today, Chilean people face a situation that has little to do with the days when people declared from behind barricades that they had lost their fear of the military.
The year 1989 marks the 16th anniversary of the military dictatorship and at the same time the formal end of dictatorial administration of the bourgeois state. This is the beginning of a new capitalist democracy conceived by the military between 1973 and 1980.
On September 11, 1980, the 7th anniversary of the coup d'etat, Pinochet submitted his Constitution to a plebiscite. In a climate of terror and repression, without the possibility for the opposition to present an alternative, and without a reliable electoral registry, Pinochet's Constitution was finally "approved". An official statement dated October 21, 1980 said: "national sovereign will, expressed in a free, secret and informed event, approved by a majority the proposed Constitutional Act".
Chileans within the country or in exile witnessed this charade in dismay, lacking the capacity to raise any significant resistance to the dictatorship's plans. The popular movement was still in disarray. Reformist forces (the ex -Popular Unity parties) had no initiatives and the "democratic" bourgeois opposition was nowhere to be found.
Would Pinochet's Constitution have been approved if the plebiscite had taken place in September 11, 1983? In all probability the General would not have been able to hold a plebiscite at all. The dictatorial ballots would have provided fuel for the burning barricades erected by anonymous rebels demanding an end to the dictatorship right then and there.
Three years made an enormous difference. By 1983 we were no longer inert. The traditional fighting spirit of our people had resurfaced and taken to the streets. Leading this insurrection was no Patricio Aylwin, no Ricardo Lagos, no Luis Maira, no Clodomiro Almeyda not any of the most fervent "democrats" who today broadcast their intent to participate in the "democratic" institutions prescribed by the Constitution of 1980.
Today, things are different. On October 5, 1988 people voted so that Pinochet would surrender the administration to civilian rule. Reformist leaders told the people this was a victory resulting from their mobilization, that the dictatorship was forced to call a plebiscite. Yet, Pinochet's Constitution of 1980 spelled out plans for a 1988 plebiscite, as well as presidential and parliamentary elections for December 1989.
We will attempt to outline the circumstances leading to the popular mobilization of 1983, focusing on the economic crisis that took place under the dictatorship during that period. We will go on to analyze the ways in which a politically reformist elite gained control of the mass movement, and how such popular sentiment is now being exploited by bourgeois sectors to gain control of the administration in the December 1989 elections.
ECONOMIC RECESSION: 1975
The first two years of dictatorship (1973-75) were marked by conflict and compromise among the different sectors of the Chilean bourgeoisie. Meanwhile, the Armed Forces continued to carry out the "dirty work" of destroying the popular movement which had become a threat to their privileges during the Allende administration (1970-73).
The first measures of the dictatorship were to regain private ownership of nationalized property, to curtail social expenditures, to eliminate any means of proletarian defense (such as the unions) and to reduce wages. Up to this point all sectors of the bourgeoisie were in accord including the Christian Democrats, who were hopeful "their" generals would be able to secure the nomination of their leader Eduardo Frei, for the presidency.
However, the economic option presented by the Christian Democrats -subsidized capitalist development- was not favored by the powers from abroad who had masterminded and financed the overthrow of Allende.
The imperialist objective was to transform Chile into a "useful" consumer-production market that would fit in their international scheme. Transnational corporations dislike competition, no matter how insignificant. They liked even less to be denied control in a country that was traditionally under their domination.
It is in this environment of debate over a coherent economic policy that the dictatorship faced its first recession in 1975. In the end, Pinochet followed the "recommendation" of US imperialism: to install a new team of American trained economists willing to try new methods of inserting the Chilean economy into the international capitalist market.
THE ECONOMIC MODEL OF 1975
The economic strategy established by the dictatorship in 1975 outlined the following measures:
The overall goal was to re-insert Chile in the new capitalist international division of labor.
The economic groups able to accomplish these goals were only two: 1) The local financial groups, and 2) large foreign investors.
This gave form to what opposition economists terms the "exclusion and concentration" mode of accumulation. This formula relied on the development of a particular sector of the economy to the detriment of others, restructuring the local market according to the patterns of consumption of the middle and upper classes, and producing for foreign rather than domestic markets.
ORIGINS OF THE 1981 CRISIS
While tens of thousands were being repressed and incarcerated, another sector of the population, from the middle class up, entered a frantic period of consumerism. Automobiles, TV sets and endless items traditionally considered luxuries were now imported with minimal tariffs, and, just like in the U.S. paid for with credit cards.
1975-1980 was described by the team of the economist on the dictatorship payroll as "a period of economic boom". The disciples of Milton Friedman pontificated over the wonders of the free market theory, which they were applying in Chile to the satisfaction of an elite sector of domestic capitalists and foreign imperialists.
Gone were the long lines of customers waiting their turn outside the shops to buy scarce merchandise (many times hoarded by merchants themselves) during the Popular Unity administration. But, what the experts neglected to say is that an enormous sector of the population lacked the means to satisfy even their most basic needs.
In fact, the implementation of the economic model was sowing the seeds of a recessive crisis that would explode in 1981 and lasted until 1983. Some of the causes of this crisis are as follows:
Increase in supply, reduction of aggregated demand. The levels of consumption per capita, real wages, unemployment, investment, and public expenditures had by 1980 sunk below 1974 levels.
Reduction of duty tariffs. In June 1979, the then Minister of Finance, Sergio de Castro, decided that foreign exchange was to be fixed for three years al 39 pesos per dollar, while tariffs were to be established at 10% for all items.
Where was the logic here? In an open capitalist economy without restrictions to imports and credits, prices would be determined by the international market and would reduce inflation. The market itself would adjust any imbalances while government abstained from interfering in price regulation.
Nonetheless, internal inflation was higher than international inflation, and exports lost their competitiveness, resulting in a loss of productive growth. Thus in constant values, exports continued to grow only until the first semester of 1980, diminishing 10% the following year. But, imports continued to grow. The ensuing trade deficit was compensated by an increase in credit from abroad.
Rather than increasing productive investment foreign credit contributed to consumerism and speculation, making the vicious cycle of credit-import-credit even more drastic. Between 1975-1981 foreign debt more than doubled from US$ 4,8 billion in 1975 to US$ 11 billion in 1980 and US$ 15.5 billion in 1981. That year alone the debt grew 40% in relation to 1980, while the private share of the debt grew over 67%.
Financial backlash of world capitalist crisis.
The destiny of all dependent economics is that they are conditioned by the situation of their masters. With the American economy in crisis, which in turn affected all other capitalist countries of the world, Chile suffered the following consequences:
Internal debt and crisis in the financial system.
With export prices at such low level, international credit more expensive and reduced external demand, the demand for local credit increased to a point that could not be satisfied by local lenders. These in turn had to contend with an increasing number of loan defaults. This situation resulted in a slow down of productive commercial and banking activities, thereby reducing the economic growth rate.
The reduction in industrial growth between 1980 and 1981 affected both the exporting and importing sectors of the economy. The happy-go-lucky profits of yesteryears became then quick losses.
Local capitalists deeply in debt could not deliver payment of their loans, directly impacting the functioning of the banking system. Mounting bad debts strangled the financial system. As of September 30, 1982, the unpaid accounts of 20 national private banks equaled 103% at their reserves. The situation of foreign banks was also serious but not as dramatic, since their unpaid account totaled 72% of their reserves.
Loss of Capital
The nationalist spirit of Chilean capitalists has its limits: when their pockets hurt. Crisis and instability produced a hurried withdrawal of hard currency for deposit in banks abroad. Conservative estimates put the amount of capital deposited overseas between 1975 and 1982 at about 5.5 billion dollars and 8 billion dollars, respectively. This is equivalent to roughly half the size of the foreign debt contracted during the dictatorship.
POLITICAL CRISIS
The crisis served to dissolve some basic agreements the bourgeoisie had in effect between 1975 and 1981. Various sectors of the bourgeoisie increasingly questioned the effectiveness and legitimacy of the economic policies applied by the dictatorship. The neo-liberal bureaucracy in power was forced to confront the outrage of threatened local financial groups. The military dictatorship reserved for itself the role of arbiter.
Seizing the moment the capitalists groups that had been displaced by the financial sector (traditional agricultural groups, manufacturers, and construction companies) mobilized openly to introduce drastic reforms. We must emphasize the fact that during such attacks on the economic policies of the dictatorship, these capitalists never attacked the military per se, but the bureaucrats who worked for the dictatorship. According to them, the culprits were the "Chicago boys" not the generals.
These profound contradictions in the dominant class provided the background against which national protests erupted. The first such event took place in May 1983, drastically altering the existing balance of forces. In the presence of massive discontent in the streets, the recovery of the economy became first priority for the bourgeoisie.
LOSERS AND WINNERS
The economic groups who had benefited most from the policies of the "Chicago Boys" were the ones most affected by the crisis, which became public through a series of bankruptcies declared by banks and financial institutions. At this point this financial group lost the importance and control they previously had on the Chilean economy.
Foreign capitalists were the least affected by the crisis. Given their particular location in the productive sector and the market, their interests suffered little. Rather, these groups flourished in the course of the crisis itself.
A WAY OUT OF THE CRISIS
Marxist economists always insist upon the cyclical nature of capitalist crises. They go on to say "capitalism contains in itself the contradictions that will eventually destroy it". However, over and over again, capitalism has shown us that its internal contradictions are not enough to produce its demise.
As such, our local capitalist overcame the crisis by putting their neo-liberal policies temporarily on hold, while recruiting some of the "old guard" capitalists to administrate the economy.
The so-called "pragmatists" had no problem resurrecting the subsidiary role of the state in the capitalist economy while at the same time inviting more foreign investors to enter the country. This shift in tactic was also reflected in the political arena. Pinochet appointed an old bourgeois politician, Onofre Jarpa, as Minister of the Interior to initiate the first "dialogue" with the opposition. This "dialogue" was short-lived but lasted enough to demobilize the popular movement.
The economic measures taken to overcome the crisis included:
Reorganization of the financial system.
In August 1981, Law 18.022 of the Ministry of finance was passed, which granted the Superintendence of Banks full powers to rule on the status of any company. If a company was declared "financially unstable" it could be taken over by the state, In November 1981, eight financial institutions experienced state takeovers. In April 1982, two major banks were also taken over and later put on sale. In November 1982, the Superintendence of Banks assigned a representative to every Chilean financial institution to classify their credit applicants as "viable" or "not viable".
This process reached its peak in January 1983, with state appropriation of 7 banks, 2 of which were immediately sold. A few days later, the Chilean Central Bank sent a memo to all large foreign banks announcing that the Chilean government would assume responsibility for the foreign debt of all banks under its administration.
These state interventionist policies by the dictatorship followed the principle of "socialization of losses - private appropriation of profits." Thus, the crisis created by the bosses themselves was being passed onto the shoulders of the working class and of all Chileans, who were in affect paying the losses and debts of the bourgeoisie with their labor and taxes.
Once the financial institutions were once again "healthy," cured by the influx of state money, they were sold at cheap prices to local or foreign capitalists. At the same time the dictatorship implemented a sui generis version of "people's capitalism". The dictatorship announced with great fanfare that now everybody could participate in the capitalist system regardless of the size of his or her investment. They invited the upper middle class to invest their savings in institutions on their way to financial recovery. This influx of private money from small investors into these companies would reduce the share of money necessary to continue their operation thus making it more attractive for foreign capital to invest in Chile at reduced risk.
Normalization of the large industrial complex.
The bankruptcy of major local economic groups (Vial & Crusat-Larrain, for example) resulted in the state assuming control over many important factories they owned. After the state pumped money into them and reestablished their profitability, these factories were also sold back to private ownership.
Local capitalists who were somehow able to survive the crisis collaborated with foreign investors to buy out these revitalized factories. In this way, foreign capital gained almost total control of the Chilean economy.
Further conversion of state property into private property.
After the crisis was over. Pinochet opted for disengaging the groups that had helped the dictatorship surmount the crisis in both the economic and political arenas. Again he resorted to the "Chicago boys" for advice and to fill bureaucratic posts in the state.
The struggle between pragmatists and neo-liberals was finally settled in 1985 when Pinochet nominates Hernan Buchi as head of the Ministry of Finance. At that point, new offensives begun to further convert state property into private property regardless of the consequences. The losses acquired by the state in the sale of these entities were gigantic. For example, the sale of CHILECTRA (electricity), CAP (steel), QUIMICH (chemicals), and CTCH (telephones) represented 600 million dollars in losses as of July 1986.
Who where the winners in these transactions? There is a whole list of transnational corporations based in Australia, Japan, New Zealand, Saudi Arabia, Switzerland, the USA, and Uruguay that benefited from the Chilean crisis.
FOREIGN CAPITAL IN CHILE
When we walk about the presence of imperialism in Chile, we are not just repeating an old Marxist cliche. In each political period we can identify which foreign companies are operating in the country as well as which have desires to enter the Chilean market. Let's take a look at some of the foreign companies operating in Chile and their areas of interest:
AETNA USA: Insurance and financial services, chemical, electrical power, and telecommunication companies.
AMERICAN INTERNATIONAL GROUP, U.S.A. Insurance, chemicals and electrical power.
BANESTO. Spain, Financial Services.
BANKERS TRUST. U.S.A. Fishing, mining, transportation, telecommunications and construction.
BIN MAHFOUZ. Saudi Arabia. Agriculture, forestry, industry, energy and financial services.
BLUE CIRCLE INDUSTRIES. England. Monopoly of cement, construction and lumber.
BOND. Australia. Was recently awarded control over the only telephone company; it has also expanded to the area of copper mining.
BRITISH AMERICAN TOBACCO CO. England: It has the monopoly of tobacco in Chile; agriculture and printing.
CARTER HOLT HARVEY, New Zealand. Oil fishery, forestry, mining, computers.
CHICAGO CONTINENTAL, U.S.A. financial services, monopoly of sugar production; electric company.
CITICORP. U.S.A. Finances. Steel.
DAIRY BOARD. New Zealand. Dairy products, financial services, fruit.
ETERNIT. France-Belgium-Switzerland: Industry, mining.
EXXON. U.S.A. Control more than half of the distribution and processing of oil and owns the large copper mine company. Disputada de las Condes.
FLETCHER CHALLENGE. New Zealand. Monopoly of paper production.
NESTLE. Switzerland. Dairy products, marketing.
PAULANER. West Germany. Beer.
REAL BANK. Brazil, Insurance, financial services.
ROTSCHILD. France. Financial services: 30% of the mine with the largest reserves of copper in the country. La Escondida.
SANTANDER BANK. Spain. Financial services.
SCHMIDHEINY. Liechtenstein. Steel, forestry, mining, agriculture.
SECURITY PACIFIC. U.S.A. Financial speculation with Chilean debt conversation.
SHELL OIL CO. England-Holland. Together with Exxon control the total distribution of oil in the country, fishing, agriculture, lumber, financial services.
As we can see. These foreign companies have entered all areas of the Chilean economy, virtually controlling it.
A SUCCESSFUL TACTIC
The Chilean dictatorship faced two economic crises (1975 and 1981) and survived both of them. In 1983, when large sectors of the population took to the streets to revolt against a system in crisis the elite in power united quickly to overcome their difficulties. Meanwhile the bourgeoisie in the opposition successfully demobilized the people on the streets with the aid of the reformist leadership.
The tactics of the bourgeoisie, either the one in power of the one in the opposition, were to manipulate the popular masses, either by repressing or deceiving them. In the latter respect, the petty-bourgeois sectors that lead the center-left political parties were instrumental in the near total deception of the masses. It is our estimation that these petty-bourgeois sectors will continue to do so but history will be a better judge of this situation than we are.
The transition to bourgeois democracy will take place with an economy, which is controlled by foreign capital. Foreign debt has been greatly inflated. The dictatorship, in an act of self-serving generosity assumed responsibility for foreign debt incurred by private institutions that went bankrupt due to their greed and corruption. Workers should not endorse either situation. Foreign capital must be expropriated and the property transferred to the workers. The foreign debt must not be paid since it was not acquired by the Chilean people but by a small elite, which drew its profits at the expense of impoverishing its laborers.
The future administration of Patricio Aylwin (Christian Democrat) has no intention of modifying the current dependent capitalist mode of production, This government will not be partial to the workers but to the rich. In this frame, the recent support statement for Aylwin's presidential candidacy by the union federation CUT (Central Union of Workers) reaffirms the dominant policies of social pact proposed by reformist politicians.
THE CAMP OF THE WORKERS
The current situation differs substantially from the rebellious days of 1983 and 1984. These are the days of compromise and controlled mobilization. The cooling off of the masses was imposed from above. As has always been the case, it was not easy to quell popular rage. But the bourgeois opposition and reformist politicians succeeded.
But what allowed the large expressions of rebellion in 1983-1984? By outlawing and repressing the open activity of all parties that would appeal to the popular masses for support, the dictatorship unleashed, paradoxically, the free and uncontrolled expression of the popular masses against its repressive system.
At the same time, the explosion of the oppressed massed didn't have the necessary leadership to transform the protests into a revolutionary insurrection. Without a nationwide coordinating organization, the various struggles were disconnected. Their gains could only be partial and their efforts more easily repressed by the military.
With great human loss, the popular movement forced its way in the political arena, allowing the emergence of the old parties of the left and the open activity of the Christian Democrats. Unable to control the eruption of the oppressed the dictatorship decided to leave it up to the ambition of the petty bourgeoisie in competition for the control of the popular constituency to calm things down.
Many old party members and bureaucrats of the left returned to the country to reclaim their positions of influence. This explains the shifts to the center that have occurred within the Communist Party and the most radical tendencies of the Socialist Party. The first element of the working class to be controlled by reformist were the unions, which due to their hierarchical structure could be more easily controlled than the almost anarchic organization in he shanty towns (poblaciones).
This partly explains the difference in activity between the union movement and the "pobladores" movement. Another important factor, of course, was the workers fear of loosing their jobs, which were not in great supply.
The church played an ambiguous role. While the priests who worked in the poblaciones were, in many cases, the only source of organizing strength and protection, the hierarchy ultimately aligned itself with the more conservative voices, those in the political opposition parties who preferred negotiating a transition to bourgeois democracy rather than overthrowing the dictatorship.
Together with a condemnation of the use of violence by the poor, which according to the logic of reformism provides the dictatorship the pretext for repressing the people, the Church hierarchy offered its services as mediator between the opposition and the dictatorship. The visit of the Pope to Chile in 1987, served to further "democratize" the masses, which had entertained high hopes for a more dramatic papal denunciation of the dictatorship.
By the days of the pontiff's visit the Christian-Democratic dominated Democratic Alliance Coalition dominated the political opposition and had regained control of the popular movement.
The reformist left coalesced in the Popular Democratic Movement (MDP) fearful of being excluded from an eventual agreement between the Christian Democrats ant the dictatorship. Incapable of leading popular discontent, the MDP ended up weak and divided. Sectors of the Communist Party and the Movement of the Revolutionary Left (MIR) carried out a strategy of "people's rebellion." Meanwhile the older leadership of the CP, the Socialist Party, the Popular Action Movement for Unity (MAPU), the Christian Left (IC) and the Social Democrats made no secret of their desire to be part of a non-existent "dialogue" between dictatorship and opposition. These sectors devoted themselves to the work at the top abandoning the work at the base and producing great disillusion amongst the masses.
So many forces manipulating the masses and denying them their right to explode and finish once and for all the system that had caused them such great suffering had the following result: the ultimate surrender of the popular movement to the timetable established by the military for their transition to "democracy".
The plebiscite of October 5, 1988 was, therefore, not only the first step in legitimizing the dictatorship imposed transition to bourgeois democracy, but also the abandoning of the politics of confrontation with the dictatorship and capitulation to the rules it had designed.
Thus, the exploited Chilean masses will enter the coming four-year period of transition go democracy disillusioned and ideologically disarmed, responding only to the collaborationist calls of the bourgeois and petty bourgeois leadership.
As for the left, its most radical sectors are still weak and isolated. Though groups like the Manuel Rodriguez Patriotic Front, the MIR, the Lautaro movement and other smaller forces continue their efforts to confront the system through armed struggle; the vast majority of Chileans have fallen prey to reformist policies. They passively trust that the next "democratic" administration will do something to solve their problems.
However, the concerted
struggle of the masses has left an important balance of victories. Union organizing rights and a few democratic rights have been restored, such as the "privilege" of publishing its own newspapers and magazines.
THE TASKS OF THE FUTURE
The main problem the masses have to tackle is to regain their independence from the control of reformist politics. In order to archive this objective the central task continues to be the creation of a revolutionary leadership. In this effort we are not beginning from zero. An important sector of the popular movement has had the experience of organizing to directly confront the bourgeois armed forces and defend its territory. Also, in the theoretical arena there are many small forces that have proposed a radical prospective.
These radical enclaves are located within the traditional parties themselves, in particular, within the Communist Party, where a new generation of militants is making it more difficult for the old bureaucracy o impose their conservative views. Let us remember that the FPMR arose from these radical sectors of youth within he CP and broke away from the party in 1988 when the bureaucrats attempted to demobilize them. Similar divisions have taken place in the various Socialist Party tendencies, as well as MIR, MAPU and the Christian Left.
There's also the existence of small revolutionary groups such as the People Power Organization, Revolutionary Resistance, Communist League, Workers Socialist Party, Socialist Party (Vanguard), Revolutionary Workers Organization and others that can contribute to the formation of a larger revolutionary organization.
The unity of the revolutionary forces however is achieved more easily in theory than in practice. Even though their common denominator is a leftist critique of reformist politics, there are many differences that has made it impossible up to now to form a united revolutionary front. Their different ideological backgrounds, sectarianism, and vanguard-ism have all been factors contributing to the atomization of the revolutionary left.
For this reason, we must make all efforts to insist upon the need to form a united revolutionary front. We should accept our diversity building upon our common definitions of alignment with the oppressed working class, and provide once and for all, a serious challenge to reformist politics from the perspective of the oppressed masses.