Social Christian Movement ( Spanish : Movimiento Social Cristiano , MSC) was a Chilean political party existing during the 1980s, formed mainly by dissidents of the Christian Democratic Party (PDC).
126-557: The first signs of former Christian Democratic militants and leaders meeting to adhere to the military dictatorship of Augusto Pinochet appeared in 1980, when a group of them called to vote favorably on the constitutional referendum of that year . The movement was founded in December 1983 by Juan de Dios Carmona , after having returned from Spain after serving functions as Chilean ambassador to that country. It also joined William Thayer Arteaga , who had been expelled from PDC for supporting
252-409: A Pareto optimum . A free market does not directly require the existence of competition; however, it does require a framework that freely allows new market entrants. Hence, competition in a free market is a consequence of the conditions of a free market, including that market participants not be obstructed from following their profit motive . An absence of any of the conditions of perfect competition
378-553: A free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any other external authority. Proponents of the free market as a normative ideal contrast it with a regulated market , in which a government intervenes in supply and demand by means of various methods such as taxes or regulations . In an idealized free market economy , prices for goods and services are set solely by
504-926: A price system , private property and the recognition of property rights , voluntary exchange , and wage labor . In a capitalist market economy , decision-making and investments are determined by every owner of wealth, property or production ability in capital and financial markets whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets. Economists , historians , political economists and sociologists have adopted different perspectives in their analyses of capitalism and have recognized various forms of it in practice. These include laissez-faire or free-market capitalism, state capitalism and welfare capitalism . Different forms of capitalism feature varying degrees of free markets, public ownership , obstacles to free competition and state-sanctioned social policies . The degree of competition in markets and
630-572: A resolution asserting that the government was not respecting the Constitution. Less than a month later, the Chilean military deposed Allende. On 11 September 1973, the combined Chilean Armed Forces (the Army, Navy, Air Force, and Carabineros ) overthrew Allende's government in a coup, during which the presidential palace, La Moneda , was shelled. That is where Allende was said to have committed suicide. While
756-631: A 21-year-old member of the FPMR (the armed wing of the PCC, created in 1983, which had attempted to assassinate Pinochet on 7 September 1986), was murdered by a group of military personnel who were supposed to arrest him on orders of Valparaíso's public prosecutor. This case was included in the Rettig Report. Among the killed and disappeared during the military junta were 440 MIR guerrillas. In December 2015, three former DINA agents were sentenced to ten years in prison for
882-433: A UN resolution condemning Pinochet's government). He was replaced by General Fernando Matthei . Pinochet organized a plebiscite on 11 September 1980 to ratify a new constitution , replacing the 1925 Constitution drafted during Arturo Alessandri 's presidency. The new Constitution, partly drafted by Jaime Guzmán , a close adviser to Pinochet who later founded the right-wing party Independent Democratic Union (UDI), gave
1008-465: A United States CIA communication base in Panama. Pinochet believed these operations were necessary in order to "save the country from communism". In 2011, the commission identified an additional 9,800 victims of political repression during Pinochet's rule, increasing the total number of victims to approximately 40,018, including 3,065 killed. Some political scientists have ascribed the relative bloodiness of
1134-463: A deficit equal to 25% of GDP. While some authors like Peter Kornbluh also argue that economic sanctions by the Nixon administration helped to create the economic crisis, others like Paul Sigmund and Mark Falcoff argue there was no blockade because aid and credit still existed (albeit in smaller quantities), and no formal trade embargo had been declared. By mid-1975, after two years of Keynesianism ,
1260-650: A free market often argue that some market failures require government intervention. Economists Ronald Coase , Milton Friedman , Ludwig von Mises , and Friedrich Hayek have responded by arguing that markets can internalize or adjust to supposed market failures. Two prominent Canadian authors argue that government at times has to intervene to ensure competition in large and important industries. Naomi Klein illustrates this roughly in her work The Shock Doctrine and John Ralston Saul more humorously illustrates this through various examples in The Collapse of Globalism and
1386-456: A higher price than the equilibrium price receive the difference as consumer surplus . The model is commonly applied to wages in the market for labor. The typical roles of supplier and consumer are reversed. The suppliers are individuals, who try to sell (supply) their labor for the highest price. The consumers are businesses, which try to buy (demand) the type of labor they need at the lowest price. As more people offer their labor in that market,
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#17328916018271512-577: A large amount of debt which made Chile the most affected nation by the Latin American debt crisis . In sharp contrast to the privatization done in other areas, Chile's nationalized main copper mines remained in government hands, with the 1980 Constitution later declaring the mines "inalienable". In 1976 the State-owned enterprise Codelco was established to exploit them; a new law in 1982 opened new mineral deposits to private investment. In November 1980,
1638-638: A lot of power to the President of the Republic—Pinochet. It created some new institutions, such as the Constitutional Tribunal and the controversial National Security Council (COSENA). It also prescribed an 8-year presidential period, and a single-candidate presidential referendum in 1988, where a candidate nominated by the Junta would be approved or rejected for another 8-year period. The new constitution
1764-410: A maximum price they are willing to pay for an item, and sellers have a minimum price at which they are willing to offer their product. The point at which the supply and demand curves meet is the equilibrium price of the good and quantity demanded. Sellers willing to offer their goods at a lower price than the equilibrium price receive the difference as producer surplus . Buyers willing to pay for goods at
1890-543: A military coup , with the support of the United States, that toppled Allende's democratically elected left-wing Unidad Popular government and ended civilian rule . In December 1974, the ruling military junta appointed Pinochet Supreme Head of the nation by joint decree, although without the support of one of the coup's instigators, Air Force General Gustavo Leigh . After his rise to power, Pinochet persecuted leftists, socialists , and political critics, resulting in
2016-406: A preference for an absence of non-market pressures on prices and wages such as those from discriminatory government taxes , subsidies , tariffs , regulations , or government-granted monopolies . In The Pure Theory of Capital , Friedrich Hayek argued that the goal is the preservation of the unique information contained in the price itself. According to Karl Popper, the idea of the free market
2142-760: A return to a Popular Unity government in case of a defeat of Pinochet. The Opposition, gathered into the Concertación de Partidos por el NO ("Coalition of Parties for NO"), organized a colorful and cheerful campaign under the slogan La alegría ya viene ("Joy is coming"). It was formed by the Christian Democracy , the Socialist Party and the Radical Party , gathered in the Alianza Democrática (Democratic Alliance). In 1988, several more parties, including
2268-660: A share of the profits (based on the overall performance of their enterprise) in addition to receiving their fixed wage or salary. The stronger incentives to maximize productivity that he conceives as possible in a socialist economy based on cooperative and self-managed enterprises might be accomplished in a free-market economy if employee-owned companies were the norm as envisioned by various thinkers including Louis O. Kelso and James S. Albus . Socialists also assert that free-market capitalism leads to an excessively skewed distributions of income and economic instabilities which in turn leads to social instability. Corrective measures in
2394-448: A truly laissez-faire system would be anti-capitalist and socialist . American individualist anarchists such as Benjamin Tucker saw themselves as economic free-market socialists and political individualists while arguing that their "anarchistic socialism" or "individual anarchism" was "consistent Manchesterism ". Various forms of socialism based on free markets have existed since
2520-521: A universalization of money -based social relations , a consistently large and system-wide class of workers who must work for wages (the proletariat ) and a capitalist class which owns the means of production—developed in Western Europe in a process that led to the Industrial Revolution . Capitalist systems with varying degrees of direct government intervention have since become dominant in
2646-466: A way to reward supporters of the regime and punish opponents. These policies produced high economic growth and dramatically increased economic inequality . Departing from these policies, Pinochet's government also caused the 1982 monetary crisis , and thus produced its devastating effects on the Chilean economy. Pinochet's wealth grew considerably during his years in power through dozens of bank accounts secretly held abroad and holdings in real estate. He
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#17328916018272772-480: Is speculation , where transactions are made to profit from short term fluctuation, rather from the intrinsic value of the companies or products. This criticism has been challenged by historians such as Lawrence Reed , who argued that monopolies have historically failed to form even in the absence of antitrust law. This is because monopolies are inherently difficult to maintain as a company that tries to maintain its monopoly by buying out new competitors, for instance,
2898-509: Is considered a market failure . Regulatory intervention may provide a substitute force to counter a market failure, which leads some economists to believe that some forms of market regulation may be better than an unregulated market at providing a free market. Friedrich Hayek popularized the view that market economies promote spontaneous order which results in a better "allocation of societal resources than any design could achieve". According to this view, market economies are characterized by
3024-581: Is incentivizing newcomers to enter the market in hope of a buy-out. Furthermore, according to writer Walter Lippman and economist Milton Friedman, historical analysis of the formation of monopolies reveals that, contrary to popular belief, these were the result not of unfettered market forces, but of legal privileges granted by government. American philosopher and author Cornel West has derisively termed what he perceives as dogmatic arguments for laissez-faire economic policies as free-market fundamentalism . West has contended that such mentality "trivializes
3150-488: Is paradoxical, as it requires interventions towards the goal of preventing interventions. Although laissez-faire has been commonly associated with capitalism , there is a similar economic theory associated with socialism called left-wing or socialist laissez-faire , also known as free-market anarchism , free-market anti-capitalism and free-market socialism to distinguish it from laissez-faire capitalism. Critics of laissez-faire as commonly understood argue that
3276-458: Is sometimes necessary to protect a country's economy from better-developed and more influential economies, while providing the stability necessary for wise long-term investment. Milton Friedman argued against central planning , price controls and state-owned corporations , particularly as practiced in the Soviet Union and China while Ha-Joon Chang cites the examples of post-war Japan and
3402-713: The Desaparecidos , the Caravan of Death , and the institutionalized torture that took place in the Villa Grimaldi complex. Almost immediately after the military's seizure of power, the junta banned all the leftist parties that had constituted Allende's UP coalition. All other parties were placed in "indefinite recess" and were later banned outright. The government's violence was directed not only against dissidents but also against their families and other civilians. The Rettig Report concluded that 2,279 people who disappeared during
3528-606: The CEPAL , assassinated in July 1976; and Orlando Letelier , a former Chilean ambassador to the United States and minister in Allende's cabinet, assassinated after his release from internment and exile in Washington, D.C. by a car bomb on 21 September 1976. Documents which were released in 2015 which alleged Pinochet ordered Letelier's assassination, though Michael Townley, who directly carried out
3654-975: The Frente Democrático de Concordia (FREDECO) along with the Social Democracy Party , the Radical Democracy , the National Democratic Party (faction led by Apolonides Parra), the Radical Civic Union , the Social Democratic Labour Movement, the Javiera Carrera Movement and Arturo Matte Civic Center. On 27 August 1986 the party announced its inclusion in the National Labour Front (FNT) led by former Interior Minister Sergio Onofre Jarpa , which
3780-615: The Humanist Party , the Ecologist Party , the Social Democrats, and several Socialist Party splinter groups added their support. On 5 October 1988, the "NO" option won with 55.99% of the votes, against 44.01% of "YES" votes. In the wake of his electoral defeat, Pinochet attempted to implement a plan for an auto-coup. He attempted to implement efforts to orchestrate chaos and violence in the streets to justify his power grab, however,
3906-538: The Socialist Party , and many others, in 1973. British priest Michael Woodward, who vanished within 10 days of the coup, was tortured and beaten to death aboard the Chilean naval ship, Esmeralda . Many other important officials of Allende's government were tracked down by the Dirección de Inteligencia Nacional (DINA) under the auspices of Operation Condor. General Carlos Prats , Pinochet's predecessor and army commander under Allende, who had resigned rather than support
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4032-567: The Western world and continue to spread. Capitalism has been shown to be strongly correlated with economic growth . For classical economists such as Adam Smith , the term free market refers to a market free from all forms of economic privilege, monopolies and artificial scarcities. They say this implies that economic rents , which they describe as profits generated from a lack of perfect competition , must be reduced or eliminated as much as possible through free competition. Economic theory suggests
4158-640: The mutualist system proposed by Proudhon, to state-owned enterprises operating in unregulated and open markets. These models of socialism are not to be confused with other forms of market socialism (e.g. the Lange model ) where publicly owned enterprises are coordinated by various degrees of economic planning , or where capital good prices are determined through marginal cost pricing. Advocates of free-market socialism such as Jaroslav Vanek argue that genuinely free markets are not possible under conditions of private ownership of productive property. Instead, he contends that
4284-470: The neoliberal economic policies of the Pinochet regime resulted in widening inequality and deepening poverty as they negatively impacted the wages, benefits and working conditions of Chile's working class. According to Chilean economist Alejandro Foxley , by the end of Pinochet's reign around 44% of Chilean families were living below the poverty line. According to The Shock Doctrine by Naomi Klein , by
4410-582: The "Chacabuco" Regiment, in Concepción . Two years later, in 1939, then with the rank of Sub-lieutenant, he moved to the "Maipo" Regiment, garrisoned in Valparaíso. He returned to Infantry School in 1940. By late 1945, Pinochet had been assigned to the "Carampangue" Regiment in the northern city of Iquique . Three years later, he entered the Chilean War Academy but had to postpone his studies because, being
4536-503: The 1980s, leading to several scandals. In March 1985, the murder of three Communist Party members led to the resignation of César Mendoza, head of the Carabineros and member of the junta since its formation. During a 1986 protest against Pinochet, 21-year-old American photographer Rodrigo Rojas DeNegri and 18-year-old student Carmen Gloria Quintana were burnt alive , with only Carmen surviving. In August 1989, Marcelo Barrios Andres,
4662-462: The 19th century. Early notable socialist proponents of free markets include Pierre-Joseph Proudhon , Benjamin Tucker and the Ricardian socialists . These economists believed that genuinely free markets and voluntary exchange could not exist within the exploitative conditions of capitalism . These proposals ranged from various forms of worker cooperatives operating in a free-market economy such as
4788-402: The Army to coordinate a far-reaching scheme with the other two branches of the military and the national police. In later years, however, high military officials from the time, such as Gustavo Leigh, commander-in-chief of the air force, have said that Pinochet reluctantly became involved only a few days before the coup was scheduled to occur, and followed the lead of the other branches (especially
4914-829: The CIA actively supported the military junta after the overthrow of Allende, and that it made many of Pinochet's officers into paid contacts of the CIA or U.S. military, even though some were known to be involved in human rights abuses. The CIA also maintained contacts in the Chilean DINA intelligence service. DINA led the multinational campaign known as Operation Condor , which amongst other activities carried out assassinations of prominent politicians in various Latin American countries, in Washington, D.C., and in Europe, and kidnapped, tortured and executed activists holding left-wing views, which culminated in
5040-486: The Carabinero police refused an order to lift the cordon against street demonstrations in the capital, according to a CIA informant. In his final move, Pinochet convened a meeting of his junta at La Moneda , in which he requested that they give him extraordinary powers to have the military seize the capital. Air Force General Fernando Matthei refused, saying that he would not agree to such a thing under any circumstances, and
5166-553: The Change of Government in Chile'), commonly known as El Libro Blanco , in which they said that they were in fact anticipating a self-coup (the alleged Plan Zeta , or Plan Z) that Allende's government or its associates were purportedly preparing. United States intelligence agencies believed the plan to be untrue propaganda. Although later discredited and officially recognized as the product of political propaganda, Gonzalo Vial Correa insists in
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5292-550: The Chilean Army until 10 March 1998, when he retired and became a senator-for-life in accordance with his 1980 Constitution . However, while in London in 1998 Pinochet was arrested under an international arrest warrant in connection with numerous human rights violations . Following a legal battle, he was released on grounds of ill-health and returned to Chile on 3 March 2000. In 2004, Chilean Judge Juan Guzmán Tapia ruled that Pinochet
5418-481: The Chilean constitutional clauses that MacLean attributes to Buchanan and discovered that they pre-dated his visit. He concludes that "evidence suggests that Buchanan's May 1980 visit did not particularly influence the subsequent drafting of the Chilean Constitution" and "there is no evidence to suggest that Buchanan had any kind of audience with Pinochet or corresponded with the Chilean dictator." According to
5544-501: The Christian Democrat President of Chile from 1964 to 1970, may have been poisoned in 1982 with toxins produced by DINA biochemist Eugenio Berrios . Though this accusation would eventually result in convictions, it was determined by 2021 that Montalva was in fact not a homicide victim. Despite having Pinochet as its highest commander, a "confession" which Michael Townley made in 1978 described Gen. Manuel Contreras as
5670-579: The French Fathers' School of Valparaíso, and then to the Military School in Santiago, which he entered in 1931. His school records show him to have been an average student, excelling in some topics and only just passing others. In 1935, after four years studying military geography , he graduated with the rank of alférez ( Second Lieutenant ) in the infantry . In September 1937, Pinochet was assigned to
5796-609: The Navy, under Admiral Merino) as they executed the coup. The new government rounded up thousands of people and held them in the national stadium , where many were killed. This was followed by brutal repression during Pinochet's rule, during which approximately 3,000 people were killed, while more than 1,000 are still missing. In the months that followed the coup, the junta published a book with text written by historian Gonzalo Vial and admiral Patricio Carvajal , titled El Libro Blanco del cambio de gobierno en Chile ('The White Book on
5922-652: The Reinvention of the World . While its supporters argue that only a free market can create healthy competition and therefore more business and reasonable prices, opponents say that a free market in its purest form may result in the opposite. According to Klein and Ralston, the merging of companies into giant corporations or the privatization of government-run industry and national assets often result in monopolies or oligopolies requiring government intervention to force competition and reasonable prices. Another form of market failure
6048-488: The US Catholic author George Weigel , he held a meeting with Pinochet during which they discussed a return to democracy. John Paul II allegedly pushed Pinochet to accept a democratic opening of his government, and even called for his resignation. Political advertising was legalized on 5 September 1987, as a necessary element for the campaign for the "NO" to the referendum, which countered the official campaign, which presaged
6174-593: The War Academy of Ecuador in Quito. He remained with the Quito mission for four-and-a-half years, during which time he studied geopolitics , military geography and military intelligence . At the end of 1959, he returned to Chile and was sent to General Headquarters of the 1st Army Division, based in Antofagasta . The following year, he was appointed commander of the "Esmeralda" Regiment. Due to his success in this position, he
6300-632: The assassination, implied otherwise in letters. This led to strained relations with the US and to the extradition of Michael Townley , a US citizen who worked for the DINA and had organized Letelier's assassination. Other targeted victims, who escaped assassination, included Christian-Democrat Bernardo Leighton , who escaped an assassination attempt in Rome in 1975 by the Italian terrorist Stefano delle Chiaie ; Carlos Altamirano ,
6426-916: The bids and offers of the participants. Scholars contrast the concept of a free market with the concept of a coordinated market in fields of study such as political economy , new institutional economics , economic sociology , and political science . All of these fields emphasize the importance in currently existing market systems of rule-making institutions external to the simple forces of supply and demand which create space for those forces to operate to control productive output and distribution. Although free markets are commonly associated with capitalism in contemporary usage and popular culture , free markets have also been components in some forms of market socialism . Historically, free market has also been used synonymously with other economic policies. For instance proponents of laissez-faire capitalism may refer to it as free market capitalism because they claim it achieves
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#17328916018276552-463: The butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Supporters of this view claim that spontaneous order is superior to any order that does not allow individuals to make their own choices of what to produce, what to buy, what to sell and at what prices due to
6678-534: The class differences and inequalities in income and power that result from private ownership enable the interests of the dominant class to skew the market to their favor, either in the form of monopoly and market power, or by utilizing their wealth and resources to legislate government policies that benefit their specific business interests. Additionally, Vanek states that workers in a socialist economy based on cooperative and self-managed enterprises have stronger incentives to maximize productivity because they would receive
6804-454: The competition and free market mechanisms. Winston Churchill supported this view by the following statement: "Land is the mother of all monopoly". The American economist and social philosopher Henry George , the most famous proponent of this thesis, wanted to accomplish this through a high land value tax that replaces all other taxes. Followers of his ideas are often called Georgists or geoists and geolibertarians . Léon Walras , one of
6930-433: The concentration of money in the hands of the very rich and the perversion of democracy through the privatization of government was always the goal. She contends this was the effective meaning of the theoretical model known as public choice , whose architect, James M. Buchanan , traveled to Chile and worked closely with the Pinochet regime. MacLean's account, however, has come under scrutiny. Economist Andrew Farrant examined
7056-541: The concern for public interest" and "makes money-driven, poll-obsessed elected officials deferential to corporate goals of profit – often at the cost of the common good". American political philosopher Michael J. Sandel contends that in the last thirty years the United States has moved beyond just having a market economy and has become a market society where literally everything is for sale, including aspects of social and civic life such as education, access to justice and political influence. The economic historian Karl Polanyi
7182-685: The country by opponents of the government. In September 1986, weapons from the same source were used in an unsuccessful assassination attempt against Pinochet by the FPMR . His military bodyguard was taken by surprise, and five members were killed. Pinochet's bulletproof Mercedes Benz vehicle was struck by a rocket, but it failed to explode and Pinochet suffered only minor injuries. He shut down parliament, suffocated political life, banned trade unions, and made Chile his sultanate. His government disappeared 3,000 opponents, arrested 30,000 (torturing thousands of them) ... Pinochet's name will forever be linked to
7308-567: The country. Armed opposition to the Pinochet rule continued in remote parts of the country. In a massive operation spearheaded by Chilean Army para-commandos, some 2,000 security forces troops were deployed in the mountains of Neltume from June to November 1981, where they destroyed two MIR bases, seizing large caches of munitions and killing a number of guerrillas. According to author Ozren Agnic Krstulovic, weapons including C-4 plastic explosives , RPG-7 and M72 LAW rocket launchers, as well as more than 3,000 M-16 rifles, were smuggled into
7434-457: The coup to the stability of the existing democratic system, which required extreme action to overturn. Some of the worst cases of human rights violation occurred during the early period: in October 1973, at least 70 people were killed throughout the country by the Caravan of Death . Charles Horman and Frank Teruggi , both U.S. journalists, " disappeared ", as did Víctor Olea Alegría , a member of
7560-786: The coup, made up of General Pinochet representing the Army , Admiral José Toribio Merino representing the Navy , General Gustavo Leigh representing the Air Force , and General César Mendoza representing the Carabineros (national police). As established, the junta exercised both executive and legislative functions of the government, suspended the Constitution and the Congress , imposed strict censorship and curfew , banned all parties and halted all political and perceived subversive activities. This military junta held
7686-471: The coup. After Allende's final radio address, he shot himself rather than becoming a prisoner. The Church Report investigating the fallout of the Watergate scandal stated that while the U.S. tacitly supported the Pinochet government after the 1973 coup, there was "no evidence" that the US was directly involved in it. This view has been contradicted by several academics, such as Peter Winn , who writes that
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#17328916018277812-405: The coup. Devine stating, "I sent CIA headquarters a special type of top-secret cable known as a CRITIC, which ... goes directly to the highest levels of government." The US provided material support to the military government after the coup, although criticizing it in public. A document released by the U.S. Central Intelligence Agency (CIA) in 2000, titled "CIA Activities in Chile", revealed that
7938-726: The credit cycle, as debt obligations, such as resuming payment of principal and interest installments, were honored. International lending organizations such as the World Bank , the International Monetary Fund , and the Inter-American Development Bank lent vast sums anew. Many foreign multinational corporations such as International Telephone and Telegraph (ITT), Dow Chemical , and Firestone , all expropriated by Allende, returned to Chile. Pinochet's policies eventually led to substantial GDP growth, in contrast to
8064-423: The deaths of roughly 60,000 people. The United States provided key organizational, financial and technical assistance to the operation. CIA contact with DINA head Manuel Contreras was established in 1974 soon after the coup, during the Junta period prior to official transfer of Presidential powers to Pinochet; in 1975, the CIA reviewed a warning that keeping Contreras as an asset might threaten human rights in
8190-448: The dispositions of the 1980 Constitution, mainly the call for general elections, while he would himself remain in power as president. If the "NO" won, Pinochet would remain President for another year, and a joint Presidential and legislative election would be held. Another reason for Pinochet's decision to call for elections was the April 1987 visit of Pope John Paul II to Chile. According to
8316-677: The economic system." David McNally of the University of Houston argues in the Marxist tradition that the logic of the market inherently produces inequitable outcomes and leads to unequal exchanges, arguing that Adam Smith 's moral intent and moral philosophy espousing equal exchange was undermined by the practice of the free market he championed. According to McNally, the development of the market economy involved coercion, exploitation and violence that Smith's moral philosophy could not countenance. McNally also criticizes market socialists for believing in
8442-478: The economy under Allende, and contributed to the destabilization of the regime. Author Peter Kornbluh argues in The Pinochet File that the US was extensively involved and actively "fomented" the 1973 coup. Authors Tim Weiner ( Legacy of Ashes ) and Christopher Hitchens ( The Trial of Henry Kissinger ) similarly argue the case that US covert actions actively destabilized Allende's government and set
8568-554: The equilibrium wage decreases and the equilibrium level of employment increases as the supply curve shifts to the right. The opposite happens if fewer people offer their wages in the market as the supply curve shifts to the left. In a free market, individuals and firms taking part in these transactions have the liberty to enter, leave and participate in the market as they so choose. Prices and quantities are allowed to adjust according to economic conditions in order to reach equilibrium and allocate resources. However, in many countries around
8694-422: The executions of 1,200 to 3,200 people, the internment of as many as 80,000 people , and the torture of tens of thousands . According to the Chilean government, the number of executions and forced disappearances was at least 3,095. Operation Condor , a U.S.-supported terror operation focusing on South America, was founded at the behest of the Pinochet regime in late November 1975, his 60th birthday. Under
8820-422: The executive role until 17 December 1974, after which it remained strictly as a legislative body, the executive powers being transferred to Pinochet with the title of President. The junta members originally planned that the presidency would be held for a year by the commanders-in-chief of each of the four military branches in turn. However, Pinochet soon consolidated his control, first retaining sole chairmanship of
8946-440: The federal government subsidizes owners of fertile land to not grow crops in order to prevent the supply curve from further shifting to the right and decreasing the equilibrium price. This is done under the justification of maintaining farmers' profits; due to the relative inelasticity of demand for crops, increased supply would lower the price but not significantly increase quantity demanded, thus placing pressure on farmers to exit
9072-442: The form of social welfare , re-distributive taxation and regulatory measures and their associated administrative costs which are required create agency costs for society. These costs would not be required in a self-managed socialist economy. Criticism of market socialism comes from two major directions. Economists Friedrich Hayek and George Stigler argued that socialism as a theory is not conducive to democratic systems and even
9198-470: The formation of complex transactional networks that produce and distribute goods and services throughout the economy. These networks are not designed, but they nevertheless emerge as a result of decentralized individual economic decisions. The idea of spontaneous order is an elaboration on the invisible hand proposed by Adam Smith in The Wealth of Nations . About the individual, Smith wrote: By preferring
9324-449: The founders of the neoclassical economics who helped formulate the general equilibrium theory , had a very similar view. He argued that free competition could only be realized under conditions of state ownership of natural resources and land. Additionally, income taxes could be eliminated because the state would receive income to finance public services through owning such resources and enterprises. The laissez-faire principle expresses
9450-521: The government initiated a second round of privatization, revising previously introduced tariff increases and creating a greater supervisory role for the Central Bank. Pinochet's market liberalizations have continued after his death, led by Patricio Aylwin . According to a 2020 study in the Journal of Economic History , Pinochet sold firms at below-market prices to politically connected buyers. Critics argue
9576-442: The government set forth an economic policy of free-market reforms that attempted to stop inflation and collapse. Pinochet declared that he wanted "to make Chile not a nation of proletarians , but a nation of proprietors ". To formulate the economic rescue, the government relied on the so-called Chicago Boys and a text called El ladrillo , and although Chile grew very quickly between 1976 and 1981, at an average of 7,2%, it had
9702-620: The growth of South Korea's steel industry as positive examples of government intervention. Critics of a laissez-faire free market have argued that in real world situations it has proven to be susceptible to the development of price fixing monopolies. Such reasoning has led to government intervention, e.g. the United States antitrust law . Critics of the free market also argue that it results in significant market dominance , inequality of bargaining power , or information asymmetry , in order to allow markets to function more freely. Critics of
9828-532: The influence of the free market –oriented " Chicago Boys ", Pinochet's military government implemented economic liberalization following neoliberalism , including currency stabilization, removed tariff protections for local industry, banned trade unions, and privatized social security and hundreds of state-owned enterprises. Some of the government properties were sold below market price to politically connected buyers, including Pinochet's son-in-law Julio Ponce Lerou . The regime used censorship of entertainment as
9954-452: The institutional magazine Cien Águilas ('One Hundred Eagles'). At the beginning of 1953, with the rank of major, he was sent for two years to the "Rancagua" Regiment in Arica . While there, he was appointed professor of the Chilean War Academy, and returned to Santiago to take up his new position. In 1956, Pinochet and a group of young officers were chosen to collaborate in the organization of
10080-403: The junta returned properties to original owners who had lost them during expropriations, and sold other industries expropriated by Allende's Popular Unity government to private buyers. This period saw the expansion of business and widespread speculation. Financial conglomerates became major beneficiaries of the liberalized economy and the flood of foreign bank loans. Large foreign banks reinstated
10206-477: The kidnapping and murder of 16 left-wing activists in 1974 and 1975. The first country in the world to make that momentous break with the past—away from socialism and extreme state capitalism toward more market-oriented structures and policies—was not Deng Xiaoping's China or Margaret Thatcher's Britain in the late 1970s, Ronald Reagan's United States in 1981, or any other country in Latin America or elsewhere. It
10332-445: The late 1980s, the economy had stabilized and was growing, but around 45% of the population had fallen into poverty while the wealthiest 10% saw their incomes rise by 83%. But others disagree, Chilean economist José Piñera argues that 2 years after Pinochet took power, poverty was still at 50% and the liberal reforms reduced it to 7.8% in 2013 as well as income per capita rising from US$ 4.000 in 1975 to US$ 25.000 in 2015, supporters of
10458-428: The law of supply and demand influences prices toward an equilibrium that balances the demands for the products against the supplies. At these equilibrium prices, the market distributes the products to the purchasers according to each purchaser's preference or utility for each product and within the relative limits of each buyer's purchasing power . This result is described as market efficiency, or more specifically
10584-766: The leader of the Chilean Socialist Party, targeted for murder in 1975 by Pinochet, along with Volodia Teitelboim , member of the Communist Party; Pascal Allende , the nephew of Salvador Allende and president of the MIR, who escaped an assassination attempt in Costa Rica in March 1976; and US Congressman Edward Koch , who became aware in 2001 of relations between death threats and his denunciation of Operation Condor. Furthermore, according to later investigations, Eduardo Frei Montalva,
10710-400: The market. Those interventions are often done in the name of maintaining basic assumptions of free markets such as the idea that the costs of production must be included in the price of goods. Pollution and depletion costs are sometimes not included in the cost of production (a manufacturer that withdraws water at one location then discharges it polluted downstream, avoiding the cost of treating
10836-480: The military claimed that he had committed suicide, controversy surrounded Allende's death , with many commentators claiming that he had been assassinated, a theory denied by the Chilean Supreme Court in 2014. In his book about the coup, The Decisive Day ( El día decisivo, 11 de septiembre de 1973 ), Pinochet said that he was the leading plotter of the coup and had used his position as commander-in-chief of
10962-480: The military government were killed for political reasons or as a result of political violence . According to the later Valech Report approximately 31,947 were tortured and 1,312 exiled. The exiles were pursued all over the world by the intelligence agencies. In Latin America, this was carried out under Operation Condor , a cooperation plan between the various intelligence agencies of South American countries, assisted by
11088-682: The military junta, and then was proclaimed "Supreme Chief of the Nation" ("Jefe Supremo de la Nación"), the de facto provisional president, on 17 June 1974 by Decree Law No. 527. He was officially titled "President of the Republic" on 17 December 1974. General Leigh, head of the Air Force, became increasingly opposed to Pinochet's policies and was forced into retirement on 24 July 1978, after contradicting Pinochet on that year's plebiscite (officially called Consulta Nacional, or National Consultation, in response to
11214-659: The military regime, as leader of the MSC, and sought to bring together those who followed the Social Christian postulates. Among its founders were also the former deputies Santiago Gajardo, Ana Rodríguez and Blanca Retamal. In 1984 it joined the Group of Eight, a coalition of parties and movements supporting the government, which on July 2 it became the National Democratic Agreement (ADENA). On January 31, 1986, it constituted
11340-532: The most benevolent state would face serious implementation problems. More modern criticism of socialism and market socialism implies that even in a democratic system, socialism cannot reach the desired efficient outcome. This argument holds that democratic majority rule becomes detrimental to enterprises and industries, and that the formation of interest groups distorts the optimal market outcome . The general equilibrium theory has demonstrated that, under certain theoretical conditions of perfect competition ,
11466-438: The most economic freedom. In practice, governments usually intervene to reduce externalities such as greenhouse gas emissions ; although they may use markets to do so, such as carbon emission trading . Capitalism is an economic system based on the private ownership of the means of production and their operation for profit . Central characteristics of capitalism include capital accumulation , competitive markets ,
11592-463: The moves against Allende's government, was assassinated in Buenos Aires , Argentina , in 1974. A year later, the murder of 119 opponents abroad was disguised as an internal conflict, the DINA setting up a propaganda campaign to support this idea ( Operation Colombo ), a campaign publicised by the leading newspaper in Chile, El Mercurio. Other victims included Carmelo Soria , a UN diplomat working for
11718-517: The murder of a 29-year-old theology student and activist, German Rodriguez Cortes, in 1978. The same month, 62-year-old Guillermo Reyes Rammsy, a former Chilean soldier during the Pinochet years, was arrested and charged with murder for boasting of participating in 18 executions during a live phone-in to the Chilean radio show "Chacotero Sentimental". On 2 June 2017, Chilean judge Hernan Cristoso sentenced 106 former Chilean intelligence officials to between 541 days and 20 years in prison for their role in
11844-593: The negative growth seen in the early years of his administration, while public debt also was kept high mostly to finance public spending which even after the privatization of services was kept at high rates (though far less than before privatization), for example, in 1991 after one year of post-Pinochet democracy debt was still at 37.4% of the GDP. The Pinochet government implemented an economic model that had three main objectives: economic liberalization, privatization of state-owned companies, and stabilization of inflation. In 1985,
11970-402: The number and complexity of the factors involved. They further believe that any attempt to implement central planning will result in more disorder, or a less efficient production and distribution of goods and services. Critics such as political economist Karl Polanyi question whether a spontaneously ordered market can exist, completely free of distortions of political policy, claiming that even
12096-468: The office, after which he served as de jure president from 1981 to 1990. His time in office remains the longest of any Chilean ruler. Augusto Pinochet rose through the ranks of the Chilean Army to become General Chief of Staff in early 1972 before being appointed its Commander-in-Chief on 23 August 1973 by President Salvador Allende . On 11 September 1973, Pinochet seized power in Chile in
12222-614: The one who oversaw and ordered DINA's missions, even noting that he carried out numerous Operation Condor missions in Europe and the Letelier-Moffitt assassination "following orders from Gen. Contreas". In a letter which Townley personally sent to Contreas after he was implicated in the U.S. and Chilean press as the lead suspect in the Letelier-Montiff assassination, Townley, using the alias J. Andreas Wilson, indicated his belief that Contreras had not “let his Excellency [Pinochet] know
12348-459: The ostensibly freest markets require a state to exercise coercive power in some areas, namely to enforce contracts , govern the formation of labor unions , spell out the rights and obligations of corporations , shape who has standing to bring legal actions and define what constitutes an unacceptable conflict of interest . Demand for an item (such as a good or service) refers to the economic market pressure from people trying to buy it. Buyers have
12474-411: The pension system was restructured from a PAYGO -system to a fully funded capitalization system run by private sector pension funds. Healthcare and education were likewise privatized, and private hospitals and private schools existed alongside free State-run hospitals and schools. This "dual system" also extended to insurance and social security services, as State-owned FONASA (National Healthcare Fund)
12600-420: The reforms also argue that when Pinochet left power in 1990 poverty had fallen to 38% and some claim that since the consolidation of the neoliberal system inequality has been reducing. Others disagree, as protests erupted in late 2019 in response to growing inequality in the country which can be traced back to the neoliberal policies of the Pinochet dictatorship. American scholar Nancy MacLean wrote that
12726-475: The region. The CIA chose to keep him as an asset, and at one point even paid him. In addition to the CIA's maintaining of assets in DINA beginning soon after the coup, several CIA assets, such as CORU Cuban exile militants Orlando Bosch and Guillermo Novo, collaborated in DINA operations under the Condor Plan in the early years of Pinochet's presidency. A military junta was established immediately following
12852-432: The rest of the junta followed this stance, on grounds that Pinochet already had his turn and lost. Matthei would later become the first member of the junta to publicly admit that Pinochet had lost the plebiscite. Without any support from the junta, Pinochet was forced to accept the result. The ensuing Constitutional process led to presidential and legislative elections the following year. Free market In economics ,
12978-508: The returns to land and other natural resources are economic rents that cannot be reduced in such a way because of their perfect inelastic supply. Some economic thinkers emphasize the need to share those rents as an essential requirement for a well functioning market. It is suggested this would both eliminate the need for regular taxes that have a negative effect on trade (see deadweight loss ) as well as release land and resources that are speculated upon or monopolised, two features that improve
13104-573: The role of intervention and regulation as well as the scope of state ownership vary across different models of capitalism. The extent to which different markets are free and the rules defining private property are matters of politics and policy. Most of the existing capitalist economies are mixed economies that combine elements of free markets with state intervention and in some cases economic planning . Market economies have existed under many forms of government and in many different times, places and cultures. Modern capitalist societies—marked by
13230-407: The role of the CIA was crucial to the consolidation of power after the coup; the CIA helped fabricate a conspiracy against the Allende government, which Pinochet was then portrayed as preventing. He stated that the coup itself was possible only through a three-year covert operation mounted by the United States. Winn also points out that the US imposed an "invisible blockade" that was designed to disrupt
13356-569: The similarities between the alleged Plan Z and other existing paramilitary plans of the Popular Unity parties in support of its legitimacy. Pinochet was also trained by the School of the Americas (SOA) where it is likely he first encountered the ideals of the coup. Canadian reporter Jean Charpentier of Télévision de Radio-Canada was the first foreign journalist to interview General Pinochet following
13482-446: The size of the electorate and turnout in previous elections. Interviews after Pinochet's departure with people involved with the referendum confirmed that fraud had, indeed, been widespread. The Constitution was promulgated on 21 October 1980, taking effect on 11 March 1981. Pinochet was replaced as President of the Junta that day by Admiral Merino. During Pinochet's reign it is estimated that some one million people had been forced to flee
13608-405: The society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. Smith pointed out that one does not get one's dinner by appealing to the brother-love of the butcher, the farmer or the baker. Rather, one appeals to their self-interest and pays them for their labor, arguing: It is not from the benevolence of
13734-446: The stage for the 1973 coup. Despite denial of countless American agencies, current declassified documentation has proven the American involvement. Nixon and Kissinger, along with both private and public intelligence agencies were "apprised of, and even enmeshed in, the planning and executing of the military takeover." Along with this, CIA operatives directly involved, such as Jack Devine, have also come out and declared their involvement in
13860-458: The support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest, he frequently promotes that of
13986-418: The transitional provisions of the 1980 Constitution, a referendum was scheduled for 5 October 1988, to vote on a new eight-year presidential term for Pinochet. Confronted with increasing opposition, notably at the international level, Pinochet legalized political parties in 1987 and called for a vote to determine whether or not he would remain in power until 1997. If the "YES" won, Pinochet would have to implement
14112-475: The truth about this case.” Nevertheless, it was also acknowledged that the Pinochet regime made a major push cover up its role in the assassination. The extensive cover-up efforts were codenamed “Operación Mascarada.” It was also revealed that Townley, who was expelled from Chile to the United States in April 1978, believed that Contreas and Pedro Espinoza were actually more likely to make an attempt on his life than Pinochet. Protests continued, however, during
14238-429: The water), therefore governments may opt to impose regulations in an attempt to try to internalize all of the cost of production and ultimately include them in the price of the goods. Advocates of the free market contend that government intervention hampers economic growth by disrupting the efficient allocation of resources according to supply and demand while critics of the free market contend that government intervention
14364-414: The world governments seek to intervene in the free market in order to achieve certain social or political agendas. Governments may attempt to create social equality or equality of outcome by intervening in the market through actions such as imposing a minimum wage (price floor) or erecting price controls (price ceiling). Other lesser-known goals are also pursued, such as in the United States, where
14490-412: The youngest officer, he had to carry out a service mission in the coal zone of Lota . The following year, he returned to his studies in the academy. After obtaining the title of Officer Chief of Staff, in 1951, he returned to teach at the Military School. At the same time, he worked as a teachers' aide at the War Academy, assisting with military geography and geopolitics classes. He was also the editor of
14616-464: Was Pinochet's Chile in 1975. In 1973, the Chilean economy was deeply depressed for several reasons. Allende's government had expropriated many Chilean and foreign businesses, including all copper mines, and had controlled prices. Inflation had reached 606%, income per capita had contracted by 7.14% in 1973 alone and 30% compared to 1970, GDP had contracted by 5% in 1973, and public spending rose from 22.6% to 44.9% of GDP between 1970 and 1973, creating
14742-624: Was appointed sub-director of the War Academy in 1963. In 1968, he was named Chief of Staff of the 2nd Army Division, based in Santiago , and at the end of that year, he was promoted to brigadier general and Commander in Chief of the 6th Division, garrisoned in Iquique. In his new function, he was also appointed Intendent of the Tarapacá Province. In January 1971, Pinochet was promoted to division general and
14868-409: Was approved by a margin of 67.04% to 30.19% according to official figures; the opposition, headed by ex-president Eduardo Frei Montalva (who had supported Pinochet's coup), denounced extensive irregularities such as the lack of an electoral register , which facilitated multiple voting, and said that the total number of votes reported to have been cast was very much larger than would be expected from
14994-641: Was born in Valparaíso on 25 November 1915. He was the son and namesake of Augusto Pinochet Vera (1891–1944), a descendant of an 18th-century French Breton immigrant from Lamballe and Avelina Ugarte Martínez (1895–1986), a woman of Basque heritage. Pinochet went to primary and secondary school at the San Rafael Seminary of Valparaíso, the Rafael Ariztía Institute ( Marist Brothers ) in Quillota ,
15120-487: Was created in 1979 and the private and paid ISAPRES (Institutions of Previsional Health) were created in 1981. Wages decreased by 8%. Family allowances in 1989 were 28% of what they had been in 1970 and the budgets for education, health and housing had dropped by over 20% on average. The junta relied on the middle class, the oligarchy, foreign corporations, and foreign loans to maintain itself. Businesses recovered most of their lost industrial and agricultural holdings, for
15246-488: Was highly critical of the idea of the market-based society in his book The Great Transformation , stating that any attempt at its creation would undermine human society and the common good: "Ultimately...the control of the economic system by the market is of overwhelming consequence to the whole organization of society; it means no less than the running of society as an adjunct to the market. Instead of economy being embedded in social relations, social relations are embedded in
15372-492: Was later one of the founding groups of National Renewal (RN). Augusto Pinochet Augusto José Ramón Pinochet Ugarte (25 November 1915 – 10 December 2006) was a Chilean military officer who was the dictator of Chile from 1973 to 1990 . From 1973 to 1981, he was the leader of the military junta , which in 1974 declared him President of the Republic and thus the dictator of Chile ; in 1980, a referendum approved a new constitution confirming him in
15498-490: Was later prosecuted for embezzlement , tax fraud , and kickbacks on arms deals. Pinochet's 17-year rule was given a legal framework through a controversial 1980 plebiscite , which approved a new constitution drafted by a government-appointed commission. In a 1988 plebiscite , 56% voted against Pinochet's continuing as president, which led to democratic elections for the presidency and Congress. After stepping down in 1990, Pinochet continued to serve as Commander-in-Chief of
15624-425: Was medically fit to stand trial and placed him under house arrest . By the time of his death on 10 December 2006, about 300 criminal charges were still pending against him in Chile for numerous human rights violations during his 17-year rule, as well as tax evasion and embezzlement during and after his rule. He was also accused of having corruptly amassed at least US$ 28 million. Augusto José Ramón Pinochet Ugarte
15750-472: Was named General Commander of the Santiago Army Garrison. On 8 June 1971, following the assassination of Edmundo Perez Zujovic by left-wing radicals, Allende appointed Pinochet a supreme authority of Santiago province, imposing a military curfew in the process, which was later lifted. However, on 2 December 1971, following a series of peaceful protests against economic policies of Allende, the curfew
15876-483: Was re-installed, all protests prohibited, with Pinochet leading the crackdown on anti-Allende protests. At the beginning of 1972, he was appointed General Chief of Staff of the Army. With rising domestic strife in Chile, after General Prats resigned his position, Pinochet was appointed commander-in-chief of the Army on 23 August 1973 by President Salvador Allende just one day after the Chamber of Deputies of Chile approved
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