The heirs of Pinochetism insist that ‘Chile is falling to pieces’. They blame instability, a lack of certainty, and an excess of reforms—for which they also refuse to take responsibility, despite having been in government. But the truth is that the decline began long before the current political situation. The slowdown, inequality, and loss of social legitimacy are the logical consequences of a system that privileges the accumulation of private wealth over development and benefits for the vast majority. Chile is preparing for another round of presidential and parliamentary elections, and the people will have to choose between neoliberal economic continuity and a model of economic development with social awareness and respect for human rights in a comprehensive, not partial, way. Economic democracy is the condition for full political democracy.
[By Eduardo Andrade Bone. “El Siglo”, Santiago] For decades, Chile was presented as the Latin American “miracle”—a poster child for macroeconomic stability, trade openness, and sustained growth. The neoliberal model imposed during the dictatorship and subsequently managed by the democratic transition promised that, with fiscal discipline and market freedom, prosperity would come for all. Today, that narrative is fracturing; the Chilean economy is not collapsing, but it is showing clear signs of exhaustion and structural wear and tear.
For over a decade, Chile has grown at less than 2% per year, a far cry from the dynamism it temporarily exhibited in the 1990s and early 2000s. Private investment is stagnant and concentrated in sectors like mining, banking, and retail, while innovation and productive diversification are conspicuous by their absence. The country has become a space for generating rents for a privileged few, rather than one of creation; Chilean capital seeks financial returns, not productive ones.
Even so, the banks are reporting record profits. The largest fortunes (the top 1%) continue to increase their share of the national income. Companies in Chile control a significant portion of the GDP, as they generate the majority of income. Furthermore, foreign trade, which represents approximately 61% of GDP, is dominated by their export and import activities.
Meanwhile, real wages are barely growing. Chile ranks among the most unequal countries in the OECD; the richest 1% holds about 50% of the national wealth. The promises of social mobility are fading in the face of a structure that rewards inheritance more than effort—all thanks to the deficient Chilean capitalism.
The heart of the Chilean model, inherited from the dictatorship, with the privatisation of social rights, no longer convinces and is exhausted. Education, health, housing, and pensions have been transformed into businesses operating under the logic of the ‘customer’, not the ‘citizen’. The result is a society deep in debt; over 75 per cent of households hold some kind of debt, primarily in consumer credit. Growth is literally sustained on credit.
The social uprising of 2019 was the most visible expression of this accumulated discontent—a citizenry that pays for everything, that works more and earns less, and that sees how the benefits of growth only profit large corporations. The neoliberal economic model, or national capitalism, has been, above all, a crisis of a model that lacks social sensitivity and is even less humane, a system where only the “God of Money” prevails.
Faced with this outlook, the heirs of Pinochetism—UDI, RN, Evópoli, the Republican Party and the National Libertarian Party—insist that “Chile is falling to pieces.” They blame instability, a lack of certainty, and an excess of reforms, of which they take no responsibility, during the period they were the government. But the truth is that the deterioration began long before the current political situation. The slowdown, inequality, and loss of social legitimacy are the logical consequences of a scheme that privileges the accumulation of private wealth over development and benefits for the vast majority of Chileans.
The problem is not that Chile has abandoned the model, but that it can no longer sustain it. Chilean neoliberalism has aged; it is in a terminal state, with no clear alternatives or will for change, especially from the centre and far-right political sectors that embrace the economic legacy of the civic-military dictatorship. Chilean economic neoliberalism was created solely to protect the interests of the national oligarchy.
The truth is that Chile needs a new model of economic development. One that overcomes the obsession with fiscal balance and embraces the idea of an entrepreneurial state with greater social responsiveness, capable of investing, coordinating, and redistributing, as the national wealth is very poorly distributed. The model itself has only generated great social inequalities, various shortcomings, merely cosmetic changes, and massive, perpetual credit debt.
A new productive and social pact is necessary: to reindustrialise with a green focus, to capture the rents from lithium and copper, to boost public and private innovation (a mixed economy), and to implement a progressive tax reform, which currently only protects financial capital more than the world of salaried workers.
It is not about discarding the market, but about domesticating it, putting it at the service of national development and not a rent-seeking elite that cares little for the socio-economic situation of the majority of Chileans and the country itself. Economic democracy is the condition for full political democracy.
Chile isn’t falling to pieces, Chile is changing. What is crumbling is not the country, but the myth of a model that promised freedom and ended up generating inequality, debt, and deep distrust. Chilean neoliberalism is not in crisis because of an excess of state or progressive reforms; it is in crisis because it ceased to fulfil its social purpose and its own promise of prosperity. And when a model stops offering a future, the Chilean people must inevitably seek another path, as the country is still far from being a “welfare state.”
This 16th of November, Chile is preparing for another round of presidential and parliamentary elections, and the Chilean people will have to choose between neoliberal economic continuity and a model of national economic development (progressivism), with social awareness and respect for human rights in a comprehensive, not partial, way.