Pinochet’s Economic Fascism

Given that this is the 50th anniversary of the election of socialist Salvador Allende to the presidency of Chile and also the 50th anniversary of the U.S. government’s decision to destroy Chile’s democratic system by ousting him in a military coup, this would also be a good time to review what his U.S.-supported replacement, military Gen. Augusto Pinochet, did when he took power.

Recall that Allende came into power as a self-avowed socialist — that is, a person who believes that it is the rightful role of government to take care of the citizenry. Thus, Allende ardently embraced such socialist programs as Social Security, government-provided healthcare, public schooling, welfare, income taxation, and others.

Headed by Republican President Richard Nixon, the U.S. regime in 1970 was ardently rightwing. The national-security establishment — i.e., the Pentagon, the military-industrial complex, the CIA, and the NSA — were also deeply conservative.

As I pointed out in my article “The Siren Song of Social Security and Socialism,” U.S. officials viewed Allende’s election as a threat to U.S. “national security” because of the increasing possibility that socialism would become more attractive to the American people. Thus, Nixon and his national-security establishment decided to oust the leftwing Allende from power and replace him with a right-wing military general.

That finally happened in 1973. On 9/11 of that year, the national-security branch of the Chilean government went on the attack and attempted to assassinate Allende with missiles fired from military aircraft into Allende’s position in the National Palace. Once Chilean infantry surrounded the palace, Allende had no possibility of winning the battle. The national-security branch prevailed over the executive branch. Allende was left dead, apparently through suicide, possibly to avoid the torture and execution that awaited him if he were taken captive.

The general who took charge of the country was Augusto Pinochet, an ardent right-winger and, in fact, a darling of the American rightwing both then and now. The U.S. national-security establishment especially worshipped the ground Pinochet walked on because immediately after assuming power, he had his goons round up around 50,000 supporters of Allende and incarcerate, torture, and reeducate them in conservative principles and values. Around 3,000 of them were executed or disappeared.

That was awesome in the eyes of the CIA and the Pentagon. Keep in mind, after all, that 1973 was when the Vietnamese communists were on the verge of defeating U.S. forces in Vietnam and would soon thrown them out of the country. So, in the minds of the U.S. national-security establishment, the fact that Pinochet’s goons were rounding up, torturing, and reeducating socialists and communists in conservative principles and values was fantastic.

Much to the glee of the American rightwing, both then and now, Pinochet brought into his administration the so-called Chicago Boys, economists who had been educated in economic principles at the University of Chicago, where libertarian economist Milton Friedman taught.

In their roles as government officials, the Chicago Boys began privatizing industries and deregulating the economy. The result was a revival of economic activity.

Ever since, the American rightwing has extolled the virtues of Gen. Augusto Pinochet and his Chicago Boys. Even conservative-oriented libertarians have gotten on the Pinochet/Chicago Boys bandwagon, writing articles and creating video series praising their economic accomplishments.

In fact, the Pinochet/Chicago Boys phenomenon has had a profound effect on the libertarian movement. Many libertarians now believe that libertarianism is all about getting libertarians into bureaucratic and regulatory positions so that they can do what the Chicago Boys did. That’s why one sometimes sees libertarians celebrating when a conservative-oriented libertarian is appointed to head up some federal regulatory commission or when a conservative-oriented libertarian is elected to a local school board.

The reality though is that Pinochet and the Chicago Boys did not bring libertarianism, free markets, or free enterprise to Chile. A genuine libertarian, free-market, free-enterprise system is one in which economic enterprise is free of all government control, regulation, or management, not one in which conservatives or conservative-leaning libertarians are the controllers, regulators, or managers of the economy. Libertarianism turns on abolishing welfare and regulatory departments and agencies. This is what a segment of the libertarian movement still doesn’t get to this today.

What Pinochet and the Chicago Boys accomplished in Chile was more in the mold of what British rightwing ruler Margaret Thatcher achieved in Great Britain. Thatcher, not surprisingly, became a darling of not only conservatives here in America but also many conservative-leaning libertarians.

Were the Chicago Boys better central planners and better regulators than Allende’s people? Undoubtedly. But in their rush to join and serve a brutal unelected military dictatorship that was rounding up, raping, sexually abusing, disappearing, and murdering thousands of innocent people, they blocked out of their minds that that’s all they were — “free enterprise” central planners and regulators. In fact, in a regime that wield omnipotent dictatorial powers, Pinochet and his Chicago Boys didn’t even abolish the minimum wage, much less Chile’s central bank.

One of the most interesting aspects of the Pinochet regime was his approach to Social Security. Allende’s approach to Social Security was like that of the American people. The system took money from young people and transferred it to seniors. In other words, classic socialism.

Pinochet’s Social Security system instead permitted people to keep their own money but forced them to invest it in government-approved stock accounts.

Pinochet’s Social Security system has also had a profound effect on the libertarian movement, a segment of which extolls such a system as libertarian, freedom, and free enterprise.

Alas, nothing could be further from the truth. Pinochet’s Social Security system was nothing more than one based on the principles of economic fascism, a type of system that leaves property in private hands but then permits the government to direct and order how it is to be used.

Is fascism better than socialism? Fascists certainly say so. Socialists, not surprisingly, say the opposite. After all, what if there is a giant stock market crash that wipes out everyone’s Social Security retirement accounts?

But one thing is for sure: Economic fascism is no more libertarian, free market, or free enterprise than socialism is. The only genuine libertarian system, one that is based on economic liberty, is one in which in which there is no Social Security system at all — one in which people are free to keep everyone they earn and decide for themselves what to do with it.

We shouldn’t forget that Americans lived without Social Security and socialism for the first 125 years of the country’s existence. Our American ancestors wanted nothing to do with either socialism or fascism.

Nonetheless, there is still a segment of the libertarian movement, along with many in the conservative movement, that continues to promote and advanced the fascist Social Security program that was embraced by military dictator Augusto Pinochet. It’s just another reflection of how conservatives who have flooded into the libertarian movement have succeeded into turning the libertarian philosophy into a conservative-libertarian hash.

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