THE IMBUNCHE (Traditional Chilean Folk Monster)

Forward: The military Coup d’etat of September 11, 1973 that overthrew President Salvador Allende marked the end of a 130 year period of elected government and the overthrow of broad-based democratic self-rule in Chile. Up to the CIA destabilization, Chile was a remarkably egalitarian society marked by widely-shared relative affluence and a highly empowered working class. That democratic order was destroyed by a program of psychological warfare and economic sanctions ordered by the Nixon White House, carried out by the State Dept. under Henry Kissinger and the CIA acting on behalf of U.S.-based multinational corporations that had long dominated the Chilean economy. The Chile coup marked the triumph of the current era of unopposed Neoliberal dominance, which is now drawing to a close.

This paper, originally prepared for a 1993 Honors Seminar at the University of Maryland, suggests that in the two decades that followed the coup, the United States has undergone economic and political destabilization that in many ways parallel that which resulted in the overthrown of the Allende Popular Unity (UP) government. The result in both countries has been a rightward shift in politics, concentration of wealth within a previously equalitarian mixed economy, and the end of an era of middle-class dominated self-government and effective limits on multinationals and exported corporate incomes.

Chile has been referred to as a “laboratory” for the program of political regime change, neo-liberal privatization and economic concentration. This paper explores the sociological and economic context of the rise of the left-wing in Chile, its brief period of rule from 1970-73, and its subsequent overthrow and reconstruction along lines of “Chicago School” neoliberalism. We see here parallels of Chilean society and politics with those in the United States during the twenty year period that followed, and concludes that similar processes of psychological and economic destabilization, once proven in Latin America, were applied in a more indirect but effective form to overthrow and restructure America.

The author applies the “relative deprivation” model of revolution and political conflict developed by Prof. Ted Robert Gurr at University of Maryland along with the “mobilization potential” theory of Jack Goldstone and the comparative social revolutions case studies approach of Theda Skocpol and Doug McAdam to analyze the events that resulted in the rise of a proto-Marxist politics in Chile with the election of the UP government in 1970 and the covert intervention and destabilization resulting three years later in the military Coup.

This process of regime change by applied economic destabilization and psychological warfare campaigns to create an environment conducive to political violence in a relatively stable, developed society with an elected government dominated by a sizable middle-class is termed “De-democratization.” A prominent part of this is the demonization of the working class and the creation of terrorizing archetypes of Left-wing activists as monsters that must be eradicated by military action.

What are the lessons about the vulnerabilities of American democracy to destabilization from above that can now be drawn decades after the Chilean Coup?

Ultimately, this 1993 study asked, was Chile an experiment in applied neoliberal destabilization and transformation that was later applied and carried over in modified form to the U.S. during the Carter, Reagan, Bush and Clinton eras? We can now answer - just look at Venezuela, and look at the U.S. in 2019.

De-Democratization in Chile (1973-1989)

On the morning of September 11, 1973, a flight of Hawker Hunter jet fighter-bombers spun contrails across slate grey skies over the capitol city of Santiago, Chile. A moment later the jets dropped down below the cloud cover and vectored towards La Moneda, a Spanish Colonial mansion housing the offices of the Chilean President, Salvador Allende Gossens.

At 11:52 am, Chilean Air Force jets launched their first rocket salvos, setting the roof of the palace aflame, sending up a pillar of smoke that hung over the low capital skyline most of that afternoon. After a half-dozen low altitude passes over the capitol, the jets had failed to penetrate the six-foot thick stone walls of the presidential palace. By mid-afternoon, after a helicopter gunship picked off snipers on the roof, an infantry battalion stormed the palace. Only a handful of lightly-armed bodyguards survived. They were lined up face down in front of the tracks of an idling American-made M-41 Patton tank. By the end of the day, Chilean Army General Javier Palacios announced that President Allende was dead and the elected government of Chile was dissolved.

For 17 years the walls of La Moneda remained pockmarked with bullet holes, a tribute to the violent end to Chilean democracy, which had lasted with a few short interruptions for 130 years. Restoration of the façade of La Moneda was one of the first acts of parliament after the military junta stepped down in 1989 under mounting pressure from its former patrons in the United States and the UK. The restoration of the trappings of elected government – but, contained within a privatized economy dominated by multinational corporations -- was the culmination of the Neoliberal era, a pattern repeated in the “democracy wave” that swept worldwide in the early 1990s from Budapest to Cape Town. It was the triumphal moment of an unopposed global financial order. Santiago was the proving ground for that model of revolution from above and outside that swept the world.

The Role of Political Violence, Right-wing Terrorism and Assassination in Neoliberal Consolidation

Salvador Allende was the first (and, for another twenty years, the only) openly socialist leader to come to power in the mainland western hemisphere through democratic elections.* The 1970 elections had been fairly won by Allende’s leftist Popular Unity coalition (U.P.) in a closely contested three-way race despite the interference of the U.S. Central Intelligence Agency (CIA) and U.S. corporations with holdings in the country. This was also the last constituent election held in Chile until 1990.

The period of military rule that followed under General Augusto Pinochet was blackened by massive human rights violations: 30,000 Chileans were detained or imprisoned without due process, and most were routinely tortured; 2115 died while in Army custody, nearly a thousand of them “disappeared” (Summary of the Truth and Reconciliation Commission Report: 92).

Opponents of the junta who had fled abroad were tracked down by DINA, the military’s secret police, and assassinated around the world in their countries of refuge. This followed as series of wet operations carried out by death squads of Operation Condor, a coordinated operation of several Latin American dictatorships and the CIA. The most notorious incident of this type was the September 21, 1976 car bombing near Sheridan Square in Washington, DC that took the lives of Orlando Letelier, Allende’s former Ambassador to the United States, and his aide, Ronni Karpen Moffitt, the sister of U.S. Congressman Toby Moffitt (D., Conn.).

Operation Condor had been organized by a consortium of South American dictatorships coordinated by U.S. intelligence agencies during the waning days of the Ford Administration. According to Robert Parry,

The U.S. Defense Intelligence Agency confidentially informed Washington that the operation had three phases and that the "third and reportedly very secret phase of ‘Operation Condor' involves the formation of special teams from member countries who are to carry out operations to include assassinations."

The Condor accord formally took effect on Jan. 30, 1976, the same day George H.W. Bush was sworn in as CIA director. In Bush's first few months, right-wing violence across the Southern Cone of South America surged. On March 24, 1976, the Argentine military staged a coup, ousting the ineffectual President Isabel Peron and escalating a brutal internal security campaign against both violent and non-violent opponents on the Left.

A team of Chilean assassins led by a dual national American Citizen, Michael Townley, somehow managed to enter the United States weeks before the bombings despite Townley being on a terrorist watch-list kept by the State Department and Immigration and Naturalization Service (INS) and two of his confederates entered the U.S. under their own names after their visas had been recorded as cancelled.

Shortly before the assassination squad was allowed into the U.S., then CIA Director George H.W. Bush had sent a cable to the U.S. Ambassador to Paraguay, George Landau, acknowledging receipt of a warning about the intended travel to the U.S. of a pair of Chilean assassins:

Landau took the precaution of sending an urgent cable to [CIA Executive Director Vernon] Walters and photostatic copies of the fake passports to the CIA. Landau said he received an urgent cable back signed by CIA Director Bush, reporting that Walters, who was in the process of retiring, was out of town. When Walters returned a few days later, he cabled Landau that he had "nothing to do with this" mission. Landau immediately canceled the visas.

This bombing in Washington, along with the Costa-Gavras film “Missing” (1982), focused worldwide attention upon the state violence in Chile, leading to a temporary cut-off of direct U.S. aid to the Pinochet Junta.

Despite the public condemnation by the Carter Administration, effective economic sanctions were never imposed on the Junta, as they had been earlier during Allende years. During Track II of the CIA destabilization and State Department organized embargo leading up the Coup, lending and corporate investment, along with the flow of imported spare parts for the largely U.S.-made physical infrastructure and transportation were cutoff. The CIA designed a series of economic measures “to make the economy scream”, including truckers strikes and merchant boycotts creating shortages, adding to a atmosphere of psychological tension.

After the Coup and during the Reagan-Bush Administration, World Bank-IMF-International Agency for Economic Development multilateral loans and private U.S. lending resumed, which propped up the Pinochet junta with billions of dollars in hard currency desperately needed by the military junta to carry out its ambitious program to reconstruct Chile into a free-market supported national security state.

During the period 1965-1976, four left-leaning elected South American governments including Chile’s were overthrown. The process of regional de-democratization commenced on April 1, 1964 with the forced exile of Brazilian President Joao Goulart after he had placed restrictions upon the export of profits. Then, in June, 1973, Uruguay (which had enjoyed uninterrupted democracy since 1903) succumbed to a military coup a mere three months before Chile’s bloody break with electoral politics. This was followed by the assumption of direct military rule in Argentina in March 1976 after a 17-month long “dirty war” of death squads and disappearances against the Left that over the course of the next decade cost the lives of between 10,000 to 20,000 people.

The role of the United States in encouraging military takeover has been shown in each of these cases as part of the “Operation Condor” operation, a program of assassinations carried out by regional military intelligence agencies coordinated by the US State Department and the CIA. The exception to the pattern was Peru where after a 1968 coup the military embarked upon a leftist path to national development, seizing large estates, cooperatizing the holdings of rural elites, organizing the poor under a state umbrella group, and raising wages for workers, peasants, and shantytown dwellers until new leadership brought an abrupt about-face in 1975, and the imposition of authoritarian policies more in line with its neighbors.

Management of loans and the flow of American dollars by Washington was a particularly powerful weapon. After the military takeovers of the ‘seventies, Latin America was flooded with foreign loans, leading to a regional debt crisis of unprecedented proportions, considered [at that time] the most serious threat to the international banking system.

Each of the military dictatorships embarked on borrowing binges at high or, worse, variable rates of interest in an effort to boost their faltering national industries, encouraged by reckless lending habits of bankers flush with surplus OPEC deposits created by the windfall oil price spikes of 1973-74 and 1979. By 1982, Brazil ended up owing $87.5 billion, Argentina some $43.6 billion, and Chile $17 billion (Williamson: 365). Although the smallest in absolute terms, the Pinochet junta’s foreign debt was by far the largest per capita in Latin America, and perhaps the world.

After the second oil shock, and faced with declining prices on international markets for copper, its principal export, Chile underwent a crisis of liquidity which rivaled or surpassed that of the economic crisis of 1973 brought on by the U.S. destabilization of the Allende government. Further conspiring against the Chilean “economic miracle” proclaimed by the Wall Street Journal were the decisions made by conservative administrations in the United States and Great Britain to raise interest rates and constrain the supply of money and credit to bring domestic inflation under control.

The rise in interest rates caused a global recession, which hit heavily-indebted primary resource exporters like Chile particularly hard. Ironically, it was the adoption in the early 1980s by the major lending countries of the same economic policies first demonstrated in Chile, where the monetarist “experiment” had supposedly been proven sound, that led to the collapse of the Chilean economy. This in turn led to a crisis of confidence in the authoritarian state and the first stirrings of a renewed mass opposition which had been almost silenced by state terror. As the economy continued to falter in the mid-1980s, after per capita consumption dropped by 17% between 1980-84 (the worst fall in living standards in Latin America) (Williamson: 367) the middle classes and pre-coup political elites were emboldened to demand change. These domestic opposition groups took their cue from the political “reforms” pushed upon the junta by the second Reagan Administration and international lenders, who had determined that hard-line repressive states and radical monetarist policies were not producing the desired economic returns.

The narrow base of consumer growth encouraged at the top of society by authoritarian states was threatening to undermine the international markets upon which the U.S. and other major industrial powers ultimately depended upon for their own economic growth (Gill: 108-109).

The Pinochet junta finally stepped down in 1989 after losing a referendum on its continued rule permitted after ever firmer signals were sent from Washington and London to the Junta that it had to permit elections or face the consequences (signals which may have included a phony poisoning of Chilean grape exports to New York, a 1987 incident which has never been thoroughly explained but is redolent of the covert action programs employed by the CIA against Allende in the early 1970s). After the referendum, center-right Christian Democratic Party candidate Patricio Aylwin became the first elected President in Chile since 1970.

The restoration of formal electoral democracy in Chile, as its deprivation a decade and a half earlier, must be viewed in the context of concurrent regional events fostered by the United States at the urging of international finance and multinational corporations. Like Aylwin, the new generation of Latin American leaders - Carlos Salinas in Mexico (elected 1988), PaCarlos Menem (Argentina, 1989), Fernando de Collor de Mello (Brazil, 1990), Violeta Chomorro (Nicaragua, 1990), Luis Lacalle (Uruguay, 1990) - tended to acknowledge the necessity of maintaining some regulation of the economy and of social services while they have abandoned autarky and opened their economies to foreign trade and investment (Williamson: 371). In 1992-93, Chile had a rate of real growth of GNP of 10%, the highest in the world, and this reflects the apparent compatibility of the liberal welfare state with prosperity in Chile.

The counter-revolutionary coup d’etat and the national security state of 1973-89 was imposed upon Chile by the United States at a time of great crisis in political hegemony and declining North American autonomy over its own economy amidst the rise of a rival bloc of elites, particularly Mideast oil exporters who began to assert their own growing power over world markets. The recognized failure of an openly authoritarian model of development in Chile, throughout South America, and the restoration of “democratic norms” were widely greeted at the time as a welcome sign of renewed stability and growing self-confidence within the transnational regime. In fact, the option of regime change was never abandoned, and effective intervention in domestic politics, and programs of destabilization by the corporate transnational regime would be increasing apparent and effective in the years that followed.


Although the United States has played a central role in the modern history of Chile, it is impossible to understand events there without an analysis of the domestic Chilean class structure and the impact of ideological development upon its society. Although Chile’s political system was colonized by American interests in the 1960s, and the economy early in the century by American, British and German mining companies, its intellectual life had long been thoroughly European in inspiration and receptive to reformist and socialist ideologies.

The cosmopolitan nature of Chilean urban society stemmed in large part from two connected factors which distinguished it from most of its Latin neighbors: high rates of literacy and the early development of a politically influential middle class. Beginning in 1842, shortly after independence, the Chilean republic chartered the first public education system in Latin America that produced several Chilean presidents along with the Nobel laureate in Poetry, Pablo Neruda. The 1880s saw the emergence of the Radical Party, which represented the interests of the growing urban commercial and professional classes against the traditional landed conservative and liberal financial elites, who between them controlled the vast majority of the national wealth derived from land ownership and international trade in copper and nitrates. Chile was for many decades the world’s largest exporter of these two minerals, each essential to the production of exploding artillery shells.

In their opposition to the existing socio-economic order, the Chilean middle class had long been a potentially revolutionary group, particularly after the failure of liberalism early in this century to deliver upon its promise of an affluent and egalitarian society. The shortcomings of the liberal order led to growing demands for state intervention into the economy, which in turn produced a large state-supported sector marked by uncompetitive industry and outdated technologies.

The Middle-Class and the Frustrations of Reform

The austere living conditions of large numbers of well-informed and politically organized people governing amidst an obstructive oligarchic minority tied to foreign arms merchants would seem to make for enormous potential for revolutionary frustration. By 1965, educated middle-classes representing about 35% of the total population of 8.5 million, with a solid institutional base within the civil service bureaucracy and CORFU (the state planning and investment agency), academia, professional societies, cultural organizations, and small business associations. When Allende’s Socialist Party contested the 1965 national elections, the urban middle classes had moved into a role as the central player within Chile’s polity, yet had not achieved dominance within the government. The split of the polity into rough thirds (middle- class centrists, Right-wing oligarchs, and the Left) meant that there was always the need for the pivotal center to form an alliance with one or the other side in order to govern.

From the early decades of the century, the political aspirations of the reformist middle class were repeatedly blocked from the Right by the moneyed conservatives, who controlled the rural vote (about 30% of the population) along with large business oligopolies (grupos) and the press syndicates. Meanwhile, the middle-class mandate was challenged on the Left by a shifting alliance of communist and socialists with the 600,000 members of the Chilean labor confederation, and who also spoke for a sizable portion of the urban underclass which numbered about 1.5 million.

Chilean workers had long been radicalized by repeated massacres of rebellious workers who toiled within the foreign-owned mining companies. Competing British and German firms were largely taken over after World War One by the Anaconda company, headquartered in Butte, Montana as a Rockefeller family holding until it was sold to ARCO in 1977. Thousands of striking miners in Chile were killed by troops and company guards during the 1920s and 1930s.

Within Chilean politics, however, the urban middle-class seemed to hold the best cards in the game. To this complex equation must be added the external corporations which owned the most dynamic sectors of the economy, and the armed forces - a significant marginalized elite - the potential veto powers of which was underestimated by the others. Neither the officers within Chile’s socially ostracized German-trained military establishment nor the hardball executives running the MNCs - no-nonsense types such as Harold Geneen of ITT Corporation, and of Kennecott Copper - were enamored of the freewheeling, inclusive game of politics beloved by most educated Chileans.

For years, traditional elites had tolerated the rise of the opposition, barely, but viewed the democratic process as inefficient and unpredictable. This was a view shared by some in Washington, such as Henry Kissinger, who summed up the Realpolitik view upon learning of the election of socialist President Salvador Allende, “I do not see why we need to stand by and watch a country go Communist because of the irresponsibility of its own people”.

“In the United States, as you know, we are sympathetic with what you are trying to do here.”
-Henry Kissinger to Augusto Pinochet, Santiago, Chile, June 8, 1976

The Ideologization of Chilean Society:
From Nationalism to Marxism

Radical reform ideology permeated practically all areas of life in Chile, except the insular countryside, the military, and upper management of foreign and grupo held companies. Jockeying for a place in the political process (and attendant bureaucracy) gradually displaced business formation as the main vocation of bright, ambitious Chileans. This happened in large part because growing foreign and state control over industry limited the opportunities and capital available in the private sector. Competition for state jobs was acute, accelerating the socialization of the economy, leading to further polarization of Chilean party politics in the 1960s. After compulsory education was adopted in the early 20th Century, the door was opened to demands for political franchise and power sharing by a steadily rising percentage of the population, which now included a genuine industrial proletariat from which sprang the Communist Party of Chile (the first in Latin America) founded in 1912.

Experimental forms of politics and art mixed freely in Chile, years before the “counter-culture” emerged in the United States, and revolution was widely held among the literati to be equal part subversive thought and direct action. Their revolutionary romanticism stemmed from what the progressive middle class read, talked about, and created. As in France of the era, this tended to be heavily influenced by the humanistic Marxism of the Existentialist vein, writers such as Sartre, the Frankfurt School’s critical theory developed by Marcuse, which in turn was based upon the seminal work of George Lukacs, a Hungarian philosopher of the 1920s who drew his inspiration from the Hegelian, or humanistic, branch of Marxism (Bocock: 14). Revolutionary poetry, that of Neruda and the post-structuralists in particular, had an enormous audience among the burgeoning population of middle class people coming out of universities, which saw the role of higher education to train intellectuals rather than just competent technicians.

By the mid-1960s, almost 10 percent of Chilean students had access to university enrollment, which was virtually free owing to public funding (Gunther, 1966). A swelling university population served as a natural recruiting grounds for political parties demanding revolutionary change, which included a strong Socialist Party with its origins in the ‘Socialist Republic’ that was established for a few days in 1931 (Williamson). The “Second Path” to socialism, or social democracy, promoted by Allende’s Socialist Party (which had nearly won the 1958 elections) was tremendously appealing to young intellectuals by 1970, while the Communists, with roots in the trade unions, tended to follow a doctrinaire Marxist-Leninism along the lines laid down in Moscow. By the late 1960s, even the historically nationalist Radical party had moved Left, while the Christian Democrats split, many aligning themselves with Allende’s Popular Unity (U.P.) coalition.

Given the long-standing grievances of the progressive middle and socialized working classes, which has championed the cause of the silently-suffering peasantry (campasenos), it was not surprising that the primary focus of reform efforts during the 1960s was to redistribute ownership over the land and to wrest control of Chile’s primary export commodity, copper, out of foreign hands. However, because this middle-class population held onto its faith in the constitutional order, which they viewed as their own creation, along with their equation of parsimony with virtue, they had not exploded long earlier and moved with revolutionary fury to sweep away the landed oligarchy and the local agents of “copper colonialism”.

The reasons for the quiescent and continued conservative voting patterns of the peasantry are more obscure. Valenzuela has attributed it to “ignorance and tradition” reinforced by the rural oligarch’s largesse with wine and rodeos at election time, a conclusion which is backed up by the fact that in the countryside schooling, although officially mandatory to through the 8th grade, actually lasted an average of only 2.3 years (Gunther). Garreton offers a neo-Marxist explanation that the feudal relationship of the campesenos with the rural oligarchy had “structurally excluded” the peasantry along with much of the urban poor from the political system. Other observers, such as Sigmund, have tended to blame the failures of U.S. designed land reform under the Christian Democrats between 1964-70 upon the difficulties of organizing the rural poor, along with resistance waged through political and legal measures by wealthy landowners. Whatever the reason, the peasantry never became much of a direct revolutionary force in Chile.

The Limits of Radical Reform

For all their radical temper and rhetoric, the majority of the middle-class never acted along revolutionary lines. A number of factors, some psychological and others structural, were at work in repressing social revolution. First among these was the Chilean middle classes’ belief in the apparent efficacy of reform through constitutional means. They had, after all, succeeded in capturing the executive offices of the republic early in the century, and creating layers of reformist bureaucracy that regulated, more or less effectively, most areas of commerce and public life, at least in the cities. Through the control of the Presidency, they recreated government as the instrument of enlightened nationalism, much as the New Deal had transformed and nationalized urban culture in the United States.

The leveling effect of bureaucracy upon society, and Chile was highly bureaucratized by North American standards, is central to Max Weber’s conception of the modern state. Yet another classical explanation for the traditionally limited reformist politics of the Chilean middle class is the fact that even the richest Chileans held relatively modest wealth compared to their cohorts in Brazil, Argentina, or Venezuela. As Thorstein Veblen has pointed out in his seminal work on status and discontent, which heavily influenced modern revolutionary theorists such as Ted Gurr, a social milieu containing little relative advantage between the classes in ownership of property is not likely to be one which generates unrest, irrespective of the prevailing ideology held within the society. One may say that this observation is particularly apt to a society like Chile in the 1960’s, which outsiders praised as both “austere” and “civilized”, “spartan” but “orderly”, and “modest” yet “refined”. Most Chileans rather liked this characterization, which they took to heart in considering themselves the dwellers in a New Athens, a classical society of learning, decency and democracy (Gunther, Williamson).


To see the limits of reform, however, Chileans (and Americans, as has been pointed out by McAdam) did not have to look any further than the countryside, where huge semi-feudal estates, the latifundia, were worked by legions of rotos (ragged peasants) under the harsh grasp of the rural oligarchs. These rural landowners were portrayed in Latin American literature and song as archetypal objects of scorn, much as Uncle Tom’s Cabin spread the gospel of the Northern Abolitionists in the United States to vilify the slave owners of the Antebellum South. Chile, however, for reasons unique to its own history, had not yet experienced a Civil War, and the contradictions in its social development had never been worked out.

The rural oligarchy of Chile, the so-called One Hundred Families, although still powerful during the 1960s in the Chilean Senate and in their economic ties to the industrial bourgiosie, were a convenient and safe class enemy for the urban middle class. As a day-to-day reality, they were practically invisible, being physically isolated and away from sight out in the countryside, little of which was actually seen by city people behind the imposing gates of the haciendas. The landed rich thus presented a far easier target for alienation than the commercial elites of the cities, who more resembled the middle class. After all, the jefe (boss) had to be confronted every day. As in the United States, most of the middle-class aspired to join the commercial elites, with whom many had close personal ties, workplace and social relationships in Chile being rather less formal than in neighboring countries, such as Argentina.

Thus, when political conflict arose between Chile’s capitalistic elites and the middle class professionals, bureaucrats, and managers, it tended to be procrustean rather than vicious. Relationships between the top and the middle classes took what might be viewed as a pre-industrial form of orderly jostling for political advantage, rather than the raw exercise of coercive power. There was little anomie between the two contesting groups, in the Durkheimian sense of a “a state of ruthlessness”. Each nudge along the way was accompanied by a knowing wink, and class struggle was reified into what Weber termed “communal action” toward “national progress”, about which the Chileans were quite proud.

Therefore, until 1973, there was considerable progress made toward social reform and little political violence attached to the transition of administration to the middle-class in Chile, which though familiar to us in North America is indeed unusual in Latin America. Relations between the upper and lower classes, however, have been less gentile. Violence associated with industrial actions has been a recurrent feature in Chile since 1925 when more than 1,000 striking copper miners were machine gunned by troops.

Without an unawareness of the central role which reformist ideology had among educated Chileans, the national preoccupation with land reform in a country already 70% urbanized in 1965 seemed enigmatic to contemporary North American observers such as Gunther. Equally mystifying was the economic nationalism driving the “Chileanization” (government takeover with compensation) of the foreign-owned copper industry under the Christian Democratic government of Eduardo Frei (1964-70), particularly as copper production was already taxed at 75% of gross receipts, accounting for the high liquidity of the Chilean state until 1970. Revenues derived from the direct taxation of MNC copper production far and away exceed from revenues from all other sources of taxation in Chile combined. Adding to the puzzlement was that the Frei plan called for the government to incur $500 million in debt in order to buy out the large landholders (Gunther: 298), and $100 million more to purchase the North American-owned copper holdings.

From a North American vantage point, the Chileans thus appeared to be paradoxical: enormously civilized yet economically naive. The preeminence of culture over material concerns is attributable to the fact that the middle classes in Chile had yet to become consumer-oriented, primarily because of the modest wages offered professionals and most employees in the public and private sectors. Astronomical tariffs on imported goods counted as luxury items put many things taken for granted in the U.S. out of reach for most Chileans. In the mid-1960s, the salary (in dollars at the then applicable exchange rates) of a university professor in Santiago averaged about $200 per month, while a skilled worker struggled to make perhaps $40. Meanwhile, there being no domestic auto industry, the price of an average imported car (usually American) worked out to be $9,000 (quite a mark up from its Detroit sticker price of $2,200) and a bottle of Scotch fetched $23.50. (Ibid). As a result, public trasnportation in the cities was cheap and readily available. Chilean society stressed cultural erudition enhanced by the excellent local wines, while whiskey-drinking, big cars, and material ostentation was considered a vice of North American tourists and the socially declasse oligarchy.

The United States

By all accounts, from the early 1960s through 1973, the locus of foreign influence over Chile had been ongoing covert political action programs carried out by the United States Central Intelligence Agency along with social and land reforms administered through US AID financed by a $2 billion loan program under the Alliance for Progress. The Alliance was founded in 1961 to counter the spread of Castroism in the region, and most of the rationale for the American involvement in Chile appears to this writer to have had the same basis. In a bid to prevent the election in Chile of a socialist government and nationalization of U.S. holdings there, the CIA funneled between $7 million (Sigmund) and $40 million (Hersh) to influence the election campaigns of 1964, 1965 and 1970. During the same period, the Chilean military obtained the majority of its arms and foreign training from the U.S.; 1100 officers received counter-insurgency instruction in the United States or at the U.S. Army School of the Americas in Panama (Sigmund: 19-20).

In addition to the direct government to government contact, U.S. hegemony over Chile is exercised through U.S.-based multinational corporations (MNCs), such as Kennecott and Annaconda Copper, PepsiCo, and ITT, which by the mid-1960s controlled 38% of all manufacturing assets (Valenzuela), a 45% stake in Chilean exports, and 80% of its copper production before nationalization, far and away the largest sector of the economy (Hersh: 259). Beyond the influence of such direct investment was the purse strings control attached to $220 million worth of private U.S. lending extended to Chile. In the years before the 1970 election of socialist President Salvador Allende, U.S. banks provided 78.4% of Chile’s short-term credit needs, about 30% of which went for food imports (Barnett and Mueller: 142).

Creating a New Class for a New Order

Within the setting of a radicalizing Chile during the 1950s and 1960s, USAID and Department of Defense-administered cultural and academic exchange sought to strengthen ties between U.S. and Chilean elites and to extend American hegemony over the intellectual life of the country. The U.S. effort to indoctrinate what it hoped would be the future Chilean leadership focused upon military officers and the creation of a new generation of Chilean technocrats weaned upon positivist social science and Neo-Liberal market economics.

The curriculum at Ft. Bragg and the U.S. Army School for the Americas in Panama stressed counter-insurgency warfare and national security doctrine which deals with liquidating internal communist movements as the principal strategy in low-intensity warfare. The training of many of these young Chilean officers coincided with and reflected the Phoenix Program in Vietnam while anticipating the war on the Left pursued by the Chilean military following the September 1973 coup. The tactics proven in Chile echoed throughout Latin America from Venezuela to El Salvador in the years of the Pinochet junta (1973-90). (Valenzuela).

Meanwhile, promising Chilean technocrats were drilled at the University of Chicago and other elite U.S. schools in monetarist economics identified with Milton Friedman, which presumes an inherent destructiveness of the state to the economy (except as a strict regulator of the money supply), while receiving training in the behaviorist social sciences that teaches the irrelevance of free will in human action. The American style of “value neutral”, business-oriented education could not have been more contradictory to the humanistic orientation and Eurocentric curriculum pursued by most Chilean university students. Particularly at the National University of Santiago, the student body resonated to Sartre’s Existentialism - a philosophy emphasizing the necessity of moral choice in the face of a materialistically determined and ultimately fatal world - rather than to Schumpeterian theories celebrating the “creative destruction” of capitalism.

By the mid-1960s, the economics and social sciences departments of Chilean universities had become a bastion of Marxian dialectical theory displacing the state-based corporatism embraced since the 1920s by the mainstream of the Latin American intelligentsia.

Academic true believers in free markets had almost unliftable cultural baggage to carry over the rugged Chilean terrain. Even within the commercial class, accustomed to state subsidies and protective tariffs, there were few who really trusted the vagaries of the business cycle. Underlying state protectionism in Chile was a deeply rooted, visceral hostility to the vestiges of colonialism, and a profound skepticism about Liberalism and international free trade as an avenue for national development. This skepticism arose from the failures of an earlier Liberal era. Edwin Williamson describes the 19th Century Liberal order, the haunting memories of which shaped the economic nationalism and the new revolutionary ideologies later to sweep through Latin America:

In the 1880s and 1890s the educated classes were absorbing a truly secular, materialist culture; in other words, liberalism had become more than a set of slogans to throw at conservatives. The dominant intellectual influence of positivism held that only scientifically demonstrable propositions could be accepted as true. But positivism in Latin America was more than a doctrine; it reflected the determination of the governing liberal elites to pursue progress regardless of obstacles such as religion, superstitions and other ‘primitive’ cultural manifestations. Positivists advocated a form of technocracy: strong government, even dictatorship, was necessary to contain the forces of regression while material conditions could be transformed to pave the way for genuine liberal democracy; the watchword of positivist nation-builders was ‘order and progress’. (283)

During the first decade of this century, anti-positivism and economic nationalism had emerged throughout Latin America as a powerful reaction of conscience to the “scientific” Liberalism and Social Darwinism which had worked to rationalize continuing colonialist social relationships. Unlike the United States, technocracy and international free trade had been thoroughly discredited through practice in Latin America as a means of achieving social reform. The failure of authoritarian Latin regimes, such as Diaz and his “cientificos” in Mexico, to do away with the traditional oligarchic Latino order - foreign control over lucrative natural resources; the feudal system of large estates, or latifundia, which tied peasants to a life of poverty and indentured servitude; and racial discrimination against persons of indigenous Indian and African heritage - led directly to the embrace of nationalistic and revolutionary ideologies by the most educated segments of the Latin elites. Despite waves of reform which swelled up in Chile that carried populist governments into office about every twenty years - the President Alessandri (1920-1924), the Popular Front (1938-46), President Frei’s Christian Democrats (1964-1970), the problem of neocolonialistic oligarchy, and the failure of technocracy and the authoritarian state to address it, proved stubborn obstacle to social progress and reconciliation.

Marxism, a powerful force in Chile since 1912, (which had received a great boost with the triumph of Castro in Cuba), held enormous appeal for intellectuals and Chilean nationalists as it promised to finish the job of breaking the back of colonialism, and creating a truly just and equitable society.

The egalitarian goals of revolutionary politics - of both nationalist and Marxist stripes - was thus firmly entrenched within Chile, but had long been frustrated by rural oligarchs who persistently played nationalists off Marxists to exploit the procedural paralysis inherent in the Chilean political system. The conservative oligarchy, although not powerful enough in this century to capture the Chilean presidency, continued to control roughly a third of the votes in Congress. Restraints upon the Executive stemmed from the off-year elections of Congress, which worked to guarantee that the President perpetually faced an opposition or divided legislature. The frustrations of reform, on all sides, led to a strong temptation to undo the constitutional system that maintained an unsatisfying status quo. Surprisingly, though, until the intervention of external force, constitutional government proved remarkably resilient in a region rife with armed revolution and military rule.

The restoration of Liberalism and positivism in Chile occurred after the return of those promising students at the Catholic University in Santiago and other schools who had been sent north for post-graduate training. The most influential of them later served as the chief economic planners of the Pinochet Junta after having been trained at the University of Chicago, where they had been immersed in the politically-conservative Monetarism of Frederich von Hyack and Milton Friedman. These so-called “Chicago Boys”, handpicked by Friedman colleague Arnold Harberger, later provided the technocratic expertise for radical free market restructuring during the Pinochet era.

The Crisis of the State: the Chilean Economy Before Allende

Viewed according to the macroeconomic analysis of the Monetarists, the Chilean economy was an immobilized wreck even before the experiments in socialism pursued by between 1970-1973 by the Allende government.

Since 1950, the Chilean economy had been growing at a modest annual rate of about 4 percent per year, the slowest among medium and large Latin American countries, which enjoyed average growth rates approximately 50% higher (Edwards & Edwards: pp. 3-4). Between 1937-1950, growth had been a more robust 7%. Much of the drop has been blamed by neo-Liberals upon an elaborate system of protective tarriffs buttressing Chile’s inefficient and uncompetitive import substitution industries, set up (as in many other Latin countries) in an effort to cut dependence upon imported (mostly U.S.) manufactured goods.

On the other hand, neo-Marxists of the dependencia school have pointed to domination by foreign (mostly U.S.) corporations over the most lucrative mineral-exporting sector of the economy, and their practice of exporting profits rather than reinvesting locally in the new plants, technologies and diversification which might have spurred greater economic growth in Chile. That was precisely the path to economic stimulation that Allende’s economists had counted upon following the nationalization of copper and other large foreign holdings.

Nonetheless, despite the economic ills perceived from the Right and the Left, the Chilean economy had not been performing badly when viewed according to quality of life measures, particularly in comparison to its neighbors. While it did endure relatively slow growth - along with the export abroad of profits (estimated at 3.8 dollars for every dollar received in aid) - Chile maintained one of the region’s highest standards of living because the rate of growth of economy (1.7 percent real GDP per capita) had more than kept pace with population and inflation, which had been running at an average of 30-40% per year by most measures during the 1950s and 1960s. Perhaps most significantly, income distribution was by far the most equitable in Latin America, due in large part to advanced social security and labor codes adopted in the 1920s, augmented during the 1960s by further social and agrarian reforms imposed at U.S. urging.

In terms of the real socio-economic pressures driving the polarization of Chilean society during the late 1960s, very little of it can be attributed to the kind of shocking disparity between ostentatious wealth at the top repressing a broad base of grinding poverty associated with other South American societies, such as Brazil or Mexico. Compared to neighboring Brazil, where the top 5% received 50% of the national income in 1970 (Barnett), Chilean society was relatively egalitarian. In fact, the percentage of salaries paid to Chile’s wealthiest 5% was close to that of the U.S. in 1970 (40% and 38%, respectively).

Despite terrible conditions endured by the 20% of Santiago’s population in the poblaciones callampas, (so-called mushroom settlements) that sprouted up on disused land surrounding the capital, the poorest Chileans in 1968 were receiving 4.8% of total income (Hersh), compared with a mere 1.3% going to the urban poor in Mexico City (Barnett).

Although Chile had a comparatively level social structure, economic dissatisfaction was widespread in the mid-1960s. Because of inflation in the price of some essential goods, purchasing power seemed to decline for the poor and middle classes during the 1960s.

The price of bread rose 300% during 1960-65 to about 50 cents a loaf, and a steak cost $1.75 a pound, in large part because $120 million worth of wheat, beef, and other agricultural goods had to be imported at unfavorable exchange rates. Chile had until a few years earlier been a sizable net exporter of food. Much of the shortfall in food production has been blamed upon poor land management on the part of the oligarchy. Estimates for concentration of ownership in the agricultural sector state that 75% of the arable land were in the hands of 2% to 5% of the 180,000 landowners. (Sigmund, Valenzuela, Gunther).

Nonetheless, most staple food items were still affordable and plentiful, particularly seafood, fruit, and milk. A quart of milk or a bottle of beer cost 7 cents (Gunther), had a value equal to .0023 of an average workman’s monthly salary of $30. By comparison, a worker making $5.00 an hour today [1993] in the U.S. would pay out about .00125 of his monthly earnings on the same items, or half as much. This comparison is perhaps a bit misleading, as food prices in the U.S. were then as they are now the cheapest in the world, and the percentage of personal income spent for food by the working poor in Chile was low by regional standards.

Polarization and the Breakdown of the Progressive Consensus: 1966-1970

The March 1965 Congressional elections were an apparent triumph for Frei, who six months earlier had been swept into office with a record 56% of the vote in a three-way race against Socialist Party candidate Salvador Allende, who received 39%, while the Conservative candidate Julio Duran polled a mere 5%. The Christian Democratic majority in the off-year elections amounted to 55% of the seats in the lower chamber and 13 Senators, nearly enough to pass legislation on its own. The rightist parties were demolished and reduced to near-observer status. (Sigmund). It seemed that the new age of reform sought by the progressive middle classes, the “Revolution in Liberty” as Frei called it, had arrived. This presumption seemed well-founded, as the United States promised $180 million to support land reform, and negotiations with the copper companies was proceeding apace. The problem was, that by 1970, nothing much had been done.

The elections had been bought with nearly $3 million of CIA and copper money, a fact known to the Left, who had been subjected to intense vilification through the oligarchy-owned media. Propaganda, mostly directed at women, associated Allende with Russian tank attacks and Cuban firing squads. (Valenzuela). As a result, the Left parties simply refused to provide “salt and water” to the Christian Democrats, boycotted Frei’s inauguration, and thereafter voted with the Right against most of his legislation. Unable to summon a coalition with minority Radical Party Senators because of their ancient divisions over the Radical’s anti-clericalism, the Christian Democrats found themselves legislatively checkmated.

The refusal of the Left to cooperate with moderates, as they had many times before was not merely out of spite. They had been given genuinely reason to fear extermination. Five weeks after the Congressional elections, 14,000 U.S. Marines landed in the Dominican Republic to put down a rebellion by sympathizers of President Juan Bosch, a leftist who had been overthrown at the behest of the U.S. two years earlier. Almost simultaneously, President Goulart of Brazil was deposed in a coup d’etat after he had signed legislation limiting export of profits held by foreign companies to 10% of capital investment. The Johnson Administration not only appeared to continence the military takeover, but the CIA had helped to arm the rebels. (Williamson: 424-26).


The splintering of Chilean politics into clashing Left-Right factions cannot be attributed to a lack of inclusivity of the process. A vibrant participatory democracy, which seemed to have a place (and a Party) for nearly every shade along the ideological spectrum, had long been a hallmark of the Chilean political process. In addition, the Chilean state maintained a remarkable solvency until 1972, due to the direct taxation of MNC copper production.

One must look to political causes - both internal and external - rather than structural reasons for the crisis of state which led to the election of Salvador Allende’s revolutionary coalition.

The United States had underestimated the opposition from the Right to the Frei land reform program. Although the program was only marginally successful (about 28,000 of the intended 100,000 rural families actually received land by 1970 of the close to 400,000 eligible, and the rural oligarchs were compensated with cash and government bonds, land reform was viewed by many of them as communist expropriation. This impression was reinforced by the rural unionization drive fostered by the Christian Democrats under the tutelage of US AID, which also led to the involvement by the Left parties in the process of organizing the countryside. By the end of the Frei administration 114,000 campasenos had joined unions, and for the first time minimum wage laws were being enforced (Sigmund: 31-33). These reforms enraged the rural oligarchs, effectively shattering the Christian Democrat’s base of support.

Meanwhile, the Left, sensing its opportunity, was becoming more radical in its rhetoric. The Socialists declared itself after a November 1967 party congress to be a Marxist-Leninist party, declaring that “revolutionary violence was inevitable and legitimate”. A splinter group, the Movement of the Revolutionary Left (MIR) was blamed for a wave of nighttime bomb blasts targeting the U.S. Consulate, the arch-conservative El Mercurio newspaper, and the headquarters of the Christian Democrats rocked Santiago, which added to a sense of crisis in 1968-69. The Right coalesced around Jorge Alessandri, who had narrowly defeated Allende in 1958, making a bitterly contested three-way race without any of the parties holding a majority inevitable in the upcoming 1970 election. The CIA weighed in with their familiar “spoiling” propaganda campaign against Allende, in the process funneling millions $700,000 in private ITT and other U.S. corporate funds into the campaign coffers of the conservatives.

Despite U.S. meddling (and to some extent because of it, foreign funding of the conservatives having been discovered during the campaign, undermining Alessandri’s nationalist credentials), Allende’s coalition ended up with a plurality of 36.1% to the second place Alessandri’s 34.9%, and Radomiro Tomic the Christian Democratic candidate (Frei forbidden by the Chilean consititution to succeed himself) received 27.8%. A botched Rightist Peutch ending up with the murder of the popular Army Chief of Staff Rene Schneider by dissident officers armed and funded by the CIA insured Congressional ratification of Allende in March, 1971.


As promised, the U.P. government moved quickly to nationalize most foreign holdings, including the copper companies and the telephone system. As in Peru, rural cooperatives were set up on the hundreds of large landholdings seized by peasants under the guidance of government “interveners” and leftist students sent into the countryside to organize the peasantry. Having managed to borrow an additional billion dollars, mostly from Europe, and inherited $373 million in foreign reserves from the predecessors, Allende was able to double and then triple food imports, which improved the nutrition of the poor. Wages at the bottom were raised substantially leading to a 53% rise in total consumer income, which well offsetted the 22% rise in prices in 1972. (Sigmund: 68) Allende’s goal of “consumerist socialism” seemed to be at hand.

The United States, however, wasted no time in putting the screws to the U.P. government, CIA Director Richard Helms receiving his marching orders from Richard Nixon on September 14, 1970 to “make the [Chilean] economy scream”. Within a couple of days a back-channels message was received by CIA chief of station in Santiago: “Military solution is objective . . . This authority granted to CIA only to work towards a military solution to the problem.” (Hersh: 258-59; Sigmund: 50-51).

The CIA operation, “Track 1”, to block Allende through buying off confirmation votes within the Chilean Congress was quickly abandoned as unworkable, and the operation moved into the “Track 2” stage. A concerted psychological warfare campaign was directed primarily at enlisted men and lower to middle level officers within the armed forces to erode their allegiance to the constitutional order and de-legitimize the principle of civilian control over the military. Most of the general officers were known already to be on board.

A broader terror campaign was broadcast at the general public featuring the psychological theme of the “dismembered man”, based upon the Chilean folk myth of the Imbunche:

“Old legends are still told in the Chilean countryside. One legend explains what happens when a child disappears: he has been kidnapped by witches, and his captors, to insure his servitude, break all his bones, sew together different parts of his body and turn his head around so he must always look and walk backwards. His eyes, ears, and mouth are constantly stitched up.”

From:“A Rural Chilean Legend Comes True,” New York Times, 2/18/85, as quoted in Chile from Within, De La Parra and Dorfman, Norton, 1990

This theme anticipated the ripping apart of the fabric of Chilean society, and the transformation of its citizens into helpless, silent automatons. The El Mercurio news chain featured photos of Allende transposed with pictures of animals being slaughtered, along with unsubstantiated reports of bodies being found with their heads, limbs and testicles cut off. The CIA controlled press also played up the goulish story of a planeload of soccer players who had crashed in the Andes and ate the remains of dead passengers.

This tale of cannabilism in the Andes received international prominence, was later retold in the bestseller book Survive, made in 1992 into a Hollywood epic, and may have been a CIA psyops that “blew back” into the U.S. media. Such deeply disturbing images and stories were run alongside falsified reports of Russian submarine sightings and guerilla training camps run in the interior by Cubans. Meanwhile, the CIA Station in Santiago cooked up the notorious “Plan Z” documents, which allegedly contained the plans of the Allende government to assassinate army officers and prominent businessmen which was widely disseminated and served as the rationale for continuing military action against the Left, long after armed resistance to the coup had disappeared

Most attention in the public literature about the Coup has focused upon the economic destabilization attendant to Track 2. This consisted of a simultaneous cutoff of nearly all public and private credit from the United States along with a legal attack by the U.S. companies which effectively blocked the sale of expropriated copper on international markets. Another effective form of economic warfare was the cutoff of spare parts for U.S. made equipment, especially trucks, the Chilean economy being particularly dependent upon the trucking industry for delivery of goods due to the long distances and mountainous geography separating cities dotted along the 2,000 mile long Chilean coast. Compounding this was the CIA penetration of the truckers union and other small business organizations, which led to work stoppages in critical industries affected by shortages and perceived mistreatment by the Allende government and its supporters. A number of factories were taken over by workers committees under the guidance of official interveners, which alienated many businessmen and their associates in the professions, who went out on sympathy strikes.

Private banks ceased to function during 1973 due to wildly accelerating inflation and capital flight. By summer, the inflation rate had hit an annual rate of 600%, the highest in the world. With its foreign reserves exhausted, and unable to finance food imports, the government-imposed food rationing, an entirely new experience in Chile, and even previously sympathetic members of the middle classes began to wish for salvation from nationwide chaos and misery.

Most Chileans thus welcomed the intervention of the military in early September, which they assumed would be short-term before in due course to a return a civilian government.
They were wrong. The Pinochet junta continued to rule through renewed states of declared emergency and exception to the Constitution for 17 years.

As with the majority of the support for Allende, most of the victims of the Pinochet junta were middle-class. When the complete list of the killed and disappeared was published by the Truth Commission in July, 1991, it contained some telling statistical tables containing the occupations of the dead, which is reproduced below. Of the total 2,279 victims (including 132 military and police), only 686 are listed as “Workers and Campesinos” and 324 shown as students, the groups one might expect to have received the worst treatment. Rather, professionals, white collar office workers, government bureaucrats, and self-employed artisans account for more than half of the total.

Therefore, we conclude that the Chilean revolution was a middle-class nationalistic uprising fought for primarily idealist reformist goals rather than one of self-interested class-based struggle.

It’s failure was the direct result of foreign intervention by a superpower which had clearly lost hegemony, as the term is used here to signify cooperation and willing obedience, over Chile and much of Latin America. The irresponsible use of power by the U.S. in Chile and in many places around the world during the 1970s led, in turn, to a reappraisal of the superpower status of the U.S. as the primary guarantor of a stable and profitable global investment climate. The loss of autonomous control over the most dynamic transnational part of the formerly U.S.-based multinational economy, and its dispersion abroad which marks the present global political economy is the direct result of the disastrous misuse of power by the United States in countries such as Chile.

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Thank you for posting this Levymg. So wonderful to see you posting your essays here with us again!
 I will most certainly read it in it’s entirety as I’m sure many others will and then comment.

As always it’s such a great honor to have your voice among us.👍

My sincerest thanks to you our dear friend.

We will not win fighting what we hate but by saving what we love.

Keep Calm and Carry On 👍

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I am honored to be here with you, Bee.  There are few truly free and open political discussion spaces left on the web, and the Community Forum is one of the highest quality small boards.  That you have been reading my work for a long time, and continue to learn and value it, gladdens me.  Your support is very meaningful and it keeps me focused on the public sphere.  The temptation to simply withdraw into private life is strong right now, and frankly, politics and Empire have become so vile and corrupt that it would be easy to simply tune them out.  But, so long as there are others who still care about these things, I will continue to research and write about them.

As you can see, I had to reach pretty far back into my desk drawer to pull this material out.  I first drafted this 25 years ago, and it astonishes and deeply saddens me that the subject matter is now more timely and pressing than it was in the early 1990s.  There is indeed a long arc of history, but unfortunately Mr. Obama is wrong, it does not seem to be bowing toward justice, at least not in terms of how the United States finds and keeps its place in the world.  That quote is actually originated with MLK, and he was in a far better position to lay moral claim to the statement. 

Personally, I feel very privileged to have had many opportunities that have informed my view of the way things work.  I have worked for some of the institutions and agencies I write about gives me some compassion and understanding for the difficulties of those who wield power.  Many of them do it badly.  That so many mistakes are made is not surprising, but the thing I have come to understand is that most of the "necessary evils" were never really necessary, and indeed, the people in a position to make decisions had choices, but decided to do the wrong thing because it seemed the easiest thing to do at the time or they did it simply because it was the most personally rewarding. 

Does this mean I desire vengence?  No.  I desire restorative justice.  The first step toward accountability is an honest account of what happened.  That is what this is all about.

Thanks again for reading and maintaining this wonderful place.
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