2 Red Rocks 3

This is an archived version of the PW Sources newsletter from Saturday, September 16. Sign up to receive PW Sources directly to your inbox here.


On September 11, 1973, the Chilean military, led by General Augusto Pinochet, and with support from the CIA, overthrew the socialist government of President Salvador Allende. The fiftieth anniversary of the coup has occasioned several reflections on the impact of Pinochet’s neoliberal reforms.

In a recent book, SEBASTIAN EDWARDS, who briefly worked with Allende’s government, and then fled the military regime, examines Pinochet’s “Chilean Miracle.” 

From the text:

“In a speech delivered on September 11, 1979—the sixth anniversary of the coup—Pinochet announced a program called the Siete Modernizaciones (Seven Modernizations). The goal was to expand market relations everywhere in order to change Chile’s values and character. As part of the new labor law, the Plan Laboral, approved in late 1979 by the junta, union membership became voluntary, and unions could not join forces across firms in order to negotiate at the industry or national levels. Firms could impose lockouts and temporarily lay off workers. The 1981 social security reform replaced a traditional pay-as-you-go system, in which active workers’ contributions were used to pay pensions for retired workers, with a system based on individual retirement accounts. The new pension system was seriously flawed; pensions rarely surpassed 25 percent of preretirement wages. Schools were transferred to municipalities as a way of weakening the national teachers’ union. In 1981 a higher-education law was passed, allowing the creation of new private universities. There were no subsidies to higher education, and every university or technical institute, public or private, charged a market-determined tuition. The health reform of 1981 allowed workers to use the health tax (7 percent of wages) to finance the purchase of private insurance. For all practical purposes this was a voucher system, in which members of the professional and managerial class were able to get around public health provision. Therefore, a dual health care system was created. The well-to-do had health care close to that of the First World, while the poor had mediocre medical services and were subject to long waiting lists for surgeries.” 

+  “After 1973, around one-third of the land expropriated by Presidents Frei and Allende was returned to former owners and close to another one-third was auctioned to non-rural dwellers. Barely one-third of the area was allocated to peasants.” By Ricardo Ffrench-Davis. Link

+  “After the coup, agriculture became highly insecure in Chile, as the permanent work campesinos had formerly enjoyed in state-managed farms gave way to seasonal jobs lasting between three and six months.” By Heidi Tinsman. Link

+  “One of the longest-standing movements, which had been active since the time of the dictatorship, was the campaign for a constituent assembly.” An interview with Camila Vergara on drafting of Chile’s new constitution. Link


Colonial concessions

SARA LOWES is an assistant professor of economics at the University of California, San Diego. A recent paper coauthored with Eduardo Montero explores the present-day legacies of colonial concessions in the Democratic Republic of Congo.  

From the abstract

“All colonial powers granted concessions to private companies to extract natural resources during the colonial era. Within Africa, these concessions were characterized by indirect rule and violence. We use the arbitrarily defined borders of rubber concessions granted in the north of the Congo Free State to examine the causal effects of this form of economic organization on development. We find that historical exposure to the concessions causes significantly worse education, wealth, and health outcomes. To examine mechanisms, we collect survey and experimental data from individuals near a former concession boundary. We find that village chiefs inside the former concessions provide fewer public goods, are less likely to be elected, and are more likely to be hereditary. However, individuals within the concessions are more trusting, more cohesive, and more supportive of sharing income.”

+ + +

+  “Defying the conventional development narrative, increased investment in the agricultural sector has not automatically led to industrial development or increased employment.” New on PW, Shreya Sinha on investment and agriculture in Punjab. Link.

+  “If pension funds do not proactively address the risks of climate change, it is those same workers—the current and future beneficiaries of pension funds—who will bear the burden.” Also new on PW, Lenore Palladino on pension funds, asset managers, and solar energy. Link.

+  “The liberal trading order has been weaponized; security, not efficiency, is the new watchword. And yet, 2023 has seen an all-time high of goods traded across borders.” From the most recent Polycrisis newsletter, by Kate Mackenzie and Tim Sahay. Link

+  “The Hacienda Hedge has helped the Mexican government navigate multiple global shocks, including the 2008 global financial crisis and the COVID-19 pandemic.” A new report on the Hacienda Hedge—the Mexican Treasury’s cash-flow-positive, insurance-like petroleum hedging strategy—by JFI’s Jonathan Calenzani, Paul R. Katz, Sina Sinai, and Klea Kalia. Link.

+  Carlos Algara and Daniel J. Simmons on how financial incentives positively affect Covid-19 vaccination rates. Link

+  Two on neoliberal reforms in Turkish agriculture. Kubra M. Altaytas on the sugar industry’s privatization. Link. And Baran Karsak on the rise of harvest theft on avocado plantations. Link

+  “In exchange for this emergency loan, the IMF imposed a series of conditions that have significantly exacerbated Sri Lanka’s wage and cost-of-living crises.” By Jayati Ghosh and Kanchana N. Ruwanpura. Link.

+  Washe Kazungu on how climate action will impact land rights in Africa. Link

+  “This article examines the compatibility of authoritarianism and accountability through groundbreaking research on citizen supervision of local state agents, a novel form of accountability politics that has been underway in China for a decade.” By Meixi Zhuang. Link

+  “The hacienda was the crucial gearbox that prevented the tough, fast-moving iron wheel of mining—bound up with the requirements of the world capitalist market and the formation of a wealthy dominant class in the colonial towns—from continuing to destroy the cogs of the slow, rudimentary wooden wheel of the indigenous community, then the main ground for the reproduction of labor-power and the extraction of labor or product surplus. The Spanish hacienda institution was adapted to Mexico in the seventeenth century, and in the course of the eighteenth century it was consolidated as the main element regulating the use of labor-power. Since the plentiful supply of manpower had been squandered and exhausted in the previous period, the towns, mines, and haciendas developed various expedients for attracting and fixing their own workforce, including the gradual extension of wage labor and and its subsidiary hybrid, debt-peonage. In the evolving system, the hacienda acquired a fixed workforce in the shape of peons, servants, and artisans such as smiths, carpenters, masons, and even weavers. At the same time, according to the seasonal rhythm of field labor, it absorbed and repelled manpower from the indigenous communities. This labor-power continued to be mainly reproduced within the community: its surplus product was sucked out through the hacienda, which in turn produced food and other goods for the mines, the towns, and itself.” By Adolfo Gilly. Link

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org

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