Constitutional Odysseys

On September 11, 1980—seven years after Augusto Pinochet seized power from democratically elected Salvador Allende in a brutal US-backed military coup—the dictatorship passed a constitution that laid the groundwork for one of the world’s earliest and most enduring neoliberal experiments. The results of this experiment have been well documented: with the privatization of education, pensions, health, public transportation, and essential natural resources like water, Chile became one the most economically unequal countries in the OECD. 

The protests that erupted over rising transportation fares in October 2019 forced a national reckoning around this political and economic infrastructure. Weeks of mass strikes and public protests reinvigorated discussion about Chile’s future. A year later, nearly 80 percent of the country’s citizens voted in favor of a new constitution in a nationwide referendum. With the 2021 election of social democratic candidate Gabriel Boric—a former student activist who gained prominence through the campaign for a Constitutional Convention—it seemed that a political transformation was underway. 

But the path forward has proved meandering and vague. In September 2022, the Convention’s proposed constitution, one of the most progressive in history, was rejected by 62 percent of the public. A far-right Constitutional Council, elected in June of this year, has since proposed a new, right-led charter. On December 17, the country will return to vote on this constitutional proposal, marking the culmination of a fierce battle over Chile’s identity. 

The Boric government’s dramatic reversal of fortune is the result of conflict over the position of indigenous communities within the Chilean state, the patriarchal mobilization against feminist demands, and the role of the state in economy and society. On this final point, the ongoing debates on the Chilean constitution reflect deep-rooted divisions that have plagued the country throughout its recent history.

Dictatorial inheritance

Chile served as the experimental testing ground of the Chicago School, which pioneered the wholesale privatization of crucial services and resources, deregulated labor and financial markets, and constitutionally enshrined the independence of the Central Bank. The key innovation of this period was policy “neutrality”—abandoning focused sectoral promotion and allowing market rules to determine the fundamental questions of the economy. Financial liberalization and free trade were the core elements of this economic transformation.¹

During the 1970s, regulations were lifted on interest rates, credit expansion, and bank reserves. The resulting proliferation of private banks and alternative financial entities were at the core of the 1982 banking crisis, after the indiscriminate increase in debt, which resulted in a 14 percent reduction in GDP and unemployment surpassing 20 percent.² Equally, the gradual elimination of import tariffs fostered the exploitation of existing competitive advantages based on natural resources and eroded the competitiveness that certain domestic industries had maintained.

Positioning the state as a subsidiary to the private sector, the dictatorship replaced the public pension system with one under private administration in 1981. New financial institutions called “Pension Fund Management Companies” were established to receive individual contributions from workers. These institutions then determined pensions based on the individual’s accumulated savings during the workers’ formal years of employment. 

The dictatorship similarly privatized the healthcare system. Chile’s National Health Service was divided into a public (FONASA) and a private (ISAPRE) system. In line with the state’s reduced role in healthcare provision, primary care was delegated to local governments. After years of implementation, Chile’s public healthcare expenditure is among the lowest within the OECD, while private spending ranks fifth. As is reported by the OCDE, the private household spending on healthcare can exceed 30 percent of the family budget.

In contrast to the radical shift from public to private participation in the pension system and health, the privatization of education occurred more gradually. In higher education, the government legalized the opening of private universities and technical training centers in 1981, while integrating private companies into the management of publicly funded elementary and middle schools. Across the education system, private provision rapidly expanded, forcing a significant part of the public sector to adhere to market rules in delivering educational services. A prime example is state universities, which, due to low state funding, now charge tuition fees and must compete on equal footing with private universities to attract students.

This economic infrastructure far outlived the dictatorship. During successive center-left administrations from 1990 to 2010, economic growth was achieved while the constitution remained intact, following the slogan “continuity in change.” The first such period was between the end of the dictatorship and the financial crisis of the late 1990s: Chilean GDP grew more than 7 percent per year as a result of the non-tradable economic activity. Reforms of this period revolved around increasing investment, reducing external shocks, and raising social expenditure through higher taxation. The disastrous unemployment and poverty rates which followed the dictatorship were rapidly reduced during the ‘90s. 

Despite these notable achievements, no structural economic reforms were made. This was evident in both the role of the state concerning the provision of social rights and in the scope of horizontal economic policies. A key obstacle to economic reform was the political structure outlined in the constitution, which included the participation of appointed senators among whom was the former dictator Augusto Pinochet. The constitution also established an electoral system (the Binomial System) that favored the election of two political blocs in the parliament, undermining a proportional representation system that would enable the participation of third-party forces. The majoritarian nature of the electoral system made it challenging to build coalitions for constitutional reforms.

After lengthy negotiations (2000-2005) among the political forces of the period, fifty-eight constitutional reforms were successfully approved in 2005. While these were the most extensive to date, they all aimed at reforming the political system rather than the economic infrastructure: the protection of property rights and the role of the subsidiary state would continue to form central pillars of Chilean policymaking. Meanwhile, the Chilean economy maintained a clear path towards open trade, marked by the signing of several free trade agreements that further expanded the extraction of natural resources.³

Subsequent years would see early signs of turmoil. In response to the election of a right-wing coalition led by Sebastián Piñera between 2010 and 2014, student protests gave way to a center-left government under Michelle Bachelet. This administration integrated political sectors previously excluded from government, like the Communist Party, in an effort to transform elements of Chile’s reigning economic model. During this period, and for the first time since 1980, new issues were publicly questioned. The country’s pension system was failing: the average pensions paid by the AFPs were $181,297 in 2013 (approximately $340 as of December 2013), and the state was spending heavily to subsidize the retirement of informal workers who couldn’t make contributions. Education saw a similar fate. The lack of state intervention and public spending (state universities only received 12 percent of basic fiscal funding) meant that by 2013, 77 percent of spending on higher education came from Chilean families.

Among President Bachelet’s key proposals was a constitutional change. While her ambitions were thwarted by a right-controlled parliament, her government saw the emergence of new left-leaning political groupings like Frente Amplio, out of which Gabriel Boric emerged. 

In March 2018, Sebastián Piñera assumed the presidency again, preserving the political model that had dominated the Chilean economy since Pinochet’s fall. But the model continued to wear thin, distancing political parties from their traditional electorate—while 53 percent of Chileans identified with a political party in 2006, only 19 percent did so in 2019.

Social outbreak

On the heels of these developments, in October 2019, Minister of Transportation Gloria Hutt raised Santiago’s metro fare. Under the slogan “It’s not thirty pesos, it’s thirty years,” students’ refusal to pay increased fare quickly catalyzed weeks of intense protests, where thousands expressed their dissatisfaction with the Chilean political and economic system.

Amid criticism of the country’s education, health, and pensions systems, the call for a constitutional reform united different sectors of society behind a single demand. The successful popular referendum of October 2020 gave birth to the Constitutional Convention in July 2021, and Gabriel Boric was elected president shortly thereafter.

Entering with what seemed like an enormous mandate, Boric’s proposed reforms sought to address the key complaints emerging from the social protests. The most prominent demands centered around privatized and unequal pensions, education, and healthcare systems; the selling off of natural resources; and the rampant political abuse and corruption limiting public participation in the political process. 

With gender parity and representation for Chile’s indigenous peoples, the Constitutional Convention was one of the most progressive in history. The drafting process centered indigenous territorial rights and a commitment to feminism. Chile’s indigenous population, which constitutes 12.8 percent of the total, has historically suffered from high levels of poverty and racist discrimination. Their ancestral territories have been systematically violated by the Chilean state, particularly during Pinochet’s dictatorship. 

During the social outbreak and the proposal for the new constitution, the clash between the Western territorial identity logic defended by the Chilean state and the communal indigenous identity logic became evident. The concept of plurinationality and interculturality was proposed as a new political project, wherein within the same state, the plurality of nations would be recognized, allowing self-determination. The coexistence of indigenous legal systems and the Chilean national system would be established, each responding to the oversight of the Supreme Court. 

The constitutional convention also foregrounded feminist concerns, which had risen to prominence in Chile before 2020. Feminist university occupations in 2018 and the memorable protests of March 8, 2019 addressed femicides and the exploitation of feminized bodies.⁴ One of the most prominent constitutional reform proposals from this sphere was the defense of the freedom of choice for pregnant people regarding gestation, childbirth, and motherhood. This included, among other measures, the legalization of abortion. Additionally, the convention proposed a gender-equal democracy where all state bodies would be required to meet gender parity, and the state would guarantee the right to freedom of sexual and gender identity.⁵

The constitutional proposal also included significant changes regarding the role of the state in the economy. First, it expanded access to healthcare, education, and pensions, overturning the subsidiary state for the first time since the dictatorship. While the proposal maintained room for private sector involvement in these areas, it ensured the provision of services as a right guaranteed by the state. Second, it questioned the market’s role in strategic sectors. It upheld property rights at the same time as it made exceptions in areas such as environmental conservation and the defense of strategic resources, such as water. Water—currently managed by private entities through usage-rights purchases—was declared a “public-use good,” thus transferring its ownership to the nation.

The rejection

In September 2022, the constitutional proposal was rejected, with 61.8 percent against and 38.1 percent in favor. In one of the largest elections in Chilean history, thirteen million Chileans cast their votes, representing 86 percent of the electoral roll and almost double the turnout of the initial plebiscite in 2020. Roughly five million people who did not vote in the previous plebiscite did so in 2022, and the 7.8 million votes against the constitution exceeded the total number of votes in the initial plebiscite. Rather than representing the loss of supporters, the defeat of the constitutional proposal can be best explained by the attraction and mobilization of new voters.

This mobilization is in large part tied to the media. Chile’s two major newspapers (El Mercurio and La Tercera), have achieved an elite-funded informational duopoly that significantly impacted the result of the election.⁶ This had a direct impact on the fact that, in the months prior to the rejection, the Convention’s proposals on gender, indigenous rights, and the environment were deemed unsustainable. The media also presented the lack of incentives for growth and the inadequate protection of private property as major threats.

Opponents argued that the new Constitution, aimed at guaranteeing social rights, would lead to an unsustainable increase in fiscal spending. The Center for Public Studies published an analysis by well-known center-left economists estimating an additional fiscal cost increase ranging between 8.9 percent and 14.2 percent of the GDP.⁷While the study presented somewhat unrealistic assumptions, it also omitted the multiplier effect of public spending, thus reinforcing the false narrative that the constitutional proposal was impractical. 

Debates surrounding the pension system were emblematic of this discourse, as one of the citizen initiatives supported by the right called “not with my money” started gaining space in the media. On March 30, 2022, a well-known national publication ran the headline: “Workers will no longer be owners of their pension savings” Shortly after, the “Reject” motion began to lead over “Approve” in opinion polls. Gradually, the demand for a present and rights-guaranteeing state for basic needs such as education, healthcare, and fair pensions shifted towards a fear that the state would infringe on private property and individual rights. The circulation of fake news and misinformation exacerbated these trends, associating the new constitution with the rejection of national symbols, Chilean traditions, and civic education; the expropriation of pensions and homes; and the rising levels of crime.

In this context, the media campaign against the proposed constitution successfully represented the Boric government as extreme and the opposition as moderate. For instance, on September 3, 2022, columnist Luis Larraín asserted in La Tercera:

“[If the Rejection wins] ultimately, the excessiveness, politically represented by the Broad Front and the Communist Party, will have lost. Instead, moderation and common sense will have won.”

While the government and the constitutional convention were independent of the ruling government, the rejection of the latter was interpreted as a popular disapproval of Boric’s administration. Although the economy was experiencing the effects of imported inflation and post-pandemic economic slowdown, it was precisely after the rejection of the new constitution that Boric’s administration began to face heavy criticism, especially around economic matters. In March 2023, for instance, the Boric government’s proposed tax reform was rejected, and a widely-cited public opinion poll found that voter disapproval rose sharply following the referendum. 

Another vote

Elected by popular vote on May 7, 2023, the new Constitutional Council is primarily composed of members from far-right. While it has maintained gender parity, the body has not ensured indigenous representation. Beatriz Hevia, president of the new Council, presented the project as a statement “for the true Chileans (…) those peaceful, honest, hardworking individuals.” In the same speech, she asserted that both those who led the 2019 protests and those who politically supported them are responsible for the destruction and looting of the country. 

Unsurprisingly, then, the newest constitutional proposal has taken a sharp turn to the right, allowing for immediate expulsion of foreigners who entered irregularly, rejecting the plurinational state, repealing the limited right to legal abortion established in 2017, and denying public rights over water and other natural resources. In many ways, the proposal signals a revival of the values espoused by the dictatorship, refusing to address the demands of the 2019 protests and upholding the economic model enshrined in the 1980 constitution. 

On December 17, the people of Chile will decide whether this regressive proposal will become the nation’s constitution. Many questions remain: will the referendum manage to repeat the mass mobilization of voters seen in last year’s constitutional rejection? Or will the results display yet another shift in popular sentiment? In an increasingly polarized country where the far-right dominates the public agenda, Gabriel Boric’s government faces the challenging task of charting the progressive and inclusive economic course for which he was elected.