Often I lay awake in my bed at night thinking about how neoliberalism and its consequences have been a disaster for mankind. This habit has increased my happiness exponentially, and I suggest you try it out.
Neoliberal economic policies, imposed first in Chile under Augusto Pinochet’s dictatorship and later championed in the United States, have eroded the material and political foundations of democracy. By subordinating public needs to market logic, neoliberalism worsened the material conditions of the working class and opened space for the far-right. American and Chilean politics, embodied at their worst in Donald Trump’s and José Antonio Kast’s rise, illustrate how neoliberal structures breed disillusionment and reactionary backlash in practice. To confront this crisis, the center-left must move beyond superficial reform and crush neoliberalism once and for all.
In the wake of the Great Depression, conservative economists criticizing the New Deal spending that defined the era outlined the original theories behind neoliberalism. Their philosophy favored free-market capitalism and rejected state intervention, particularly the Keynesianism and socialism that dominated America’s and much of the world’s domestic economic policy through the 1970s until Ronald Reagan implemented neoliberal reforms in the United States. However, Americans were not the first to broadly adopt neoliberalism.
On Sept. 11, 1973, the Chilean Armed Forces under Pinochet overthrew Chile’s democracy, then led by President Salvador Allende. The ensuing military junta, which ruled until 1989, reorganized Chile’s economy under the influence of the Chicago Boys, a group of Chilean economists trained at the University of Chicago under Milton Friedman and other advocates of neoliberalism. The results were immediate, but mixed at best: They dismantled public pensions, decentralized and privatized healthcare and cut taxes. Unemployment surged to 19.6 percent and GDP fell by 13.4 percent during the Crisis of 1982. Under the extreme pressure of an already struggling economy further threatened by revolution, the regime offered a choice between continued military rule or new elections; 55 percent of Chileans voted for new elections, effectively ending the dictatorship.
Compared with much of Latin America, Chile’s economy underperformed for much of the dictatorship and by its end 48 percent of Chileans lived in poverty. But when political democracy was ushered in, Chile rapidly emerged as one of the most politically and economically stable nations in Latin America. Liberalism, among other factors, allowed Chile much freer access to the market that its despotic leadership so lauded. Yet this stability came at a cost for the poorer strata of society: The democratic governments that followed failed to dismantle the neoliberal foundations laid by Pinochet.
The center-left Concertación coalition, governing from 1990 to 2010, promised “growth with equity.” Its leadership, who were middle-class professionals detached from labor unions and grassroots organizations, managed the flaws of the neoliberal system rather than replacing it. Pensions remained privatized, healthcare dualized and higher education market-based.
Healthcare funding relied on higher taxes for poorer individuals, and the privatized pension industry became more concentrated, which often meant higher prices for the pensioners. University costs soared, making Chileans pay three to four times more relative to income than students in many European countries.
Discontent erupted in 2019, when millions protested for a new constitution to replace Pinochet’s 1980 charter. The protesters rejected not only specific policies but the broader neoliberal model that had governed Chile for nearly five decades.
Gabriel Boric’s 2021 presidential victory seemed a turning point. His coalition promised transformative change, including a new constitution. Yet both constitutional drafts were rejected, and Boric’s government has since struggled to deliver on its promises. The endurance of neoliberal institutions and the dominance of the professional class in the left wing stymied reform.
Meanwhile, the far right has resurged. José Antonio Kast, leader of the Republican Party, narrowly lost to Boric in 2021 and now leads the polls for the upcoming November 16 presidential contest. Kast has defended aspects of the Pinochet regime, denied its human-rights violations, and campaigns on an anti-immigrant, socially conservative platform. His proposals, such as closing Chile’s northern border and even digging a trench to prevent crossings, combine nationalism and authoritarian nostalgia.
Kast’s background underscores a darker past. His father, Michael Kast Schindele, was a lieutenant in the German Army and a Nazi Party member who emigrated to Chile after World War II. Kast’s success reflects the enduring power of Pinochet’s neoliberal institutions, which have forced disillusioned voters to compromise morals and turn toward figures promising order and simplicity.
The Chilean center-left has struggled to articulate a credible alternative. Jeannette Jara, the Communist Party candidate now leading the Chilean center-left coalition, represents a technocratic professionalism that fails to inspire the Chilean working class. Rejecting ideological labels, Jara projects the image of a detached liberal elite. Polls suggest she may win the first round of voting but would lose decisively to Kast in the runoff.
The Chilean example exposes a broader truth: A political system directed by and for the people is incompatible with market fundamentalism. The endurance of Pinochet’s political and economic institutions, even under leftist administrations, shows that political democracy without economic democracy, and political liberalism without economic liberalism, is inherently fragile.
Economic democracy means collective control over production through strong unions, cooperatives and public investment. It gives workers and citizens real power over their economic lives, leveling the playing field between rich and poor. Such a model prioritizes welfare over profit and rebuilds the social contract that neoliberalism destroyed.
To secure democracy, we must create institutions of solidarity. Labor unions, worker cooperatives and welfare systems, not promises, should protect working and middle classes. Superficial reforms cannot fix decades of inequality. Only genuine structural transformation can reverse the alienation empowering the far right.
Chile’s history demonstrates how economic foundations endure once established, surviving in both dictatorship and democracy. The economic model forged under Pinochet persists not because it works for the majority, but because the political class is not sufficiently responsive to the masses. The rise of the far right is not an anomaly; it is the inevitable backlash to decades of unmet promises and deepening inequality.
If the center-left wishes to defend democracy, it must do more than manage the status quo. It must democratize the economy itself. Only through economic democracy can nations like Chile, and indeed all politically democratic nations, restore faith in the idea that economic freedom and equality are one struggle.
Rafael Hernandez Guerrero, PZ ’29 is from El Refugio, San Luis Potosí, México and immigrated to Boulder, Colorado as a child. He doesn’t really know what’s going on and hopes you do.
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