Chile: the balanced view : a recopilation of articles about the Allende years and after

Allende to legally promulgate legislation that had not been considered by Congress by having each of hís cabinet members sign the law and "insisting" upon its approval.(46) The law had been origínally intended for use by the chief executive during times ofcivil war, invasion, or natural disasters, and because of this use of the power to carry out nationaliza– lions, much of the opposition fell Ihat Allende was abusing his powers as President. In addition to being-politically motivated, much of the opposition to Allende felt that many of the expropriations were bad economically. In spite of the fact that previous expropriations and price control s had resulted in huge deficits in many industrial and commercial establishments that had passed into the hands ofthe government, the adminis" tration continued its rapid pace of nationalizations during the first part of 1973.(47) The Unidad Popular had underestimated the organizational requirements of running large scale industrial operations, and often replaced key managers and technicians with men lacking experience, but loyal to the Unidad Popular coalition.(48) In addition, in an effort at building wide-spread supportfortheir policies, the Unidad Popularwould often featherbed enterprises that had been taken over by the government. By January, 1973, two months befare the March Congressional electíons, unemployment had been reduced to three percen!, the lowest in the history of Chile.(49) Yet as can be seen from the Tables, industrial production continued to fall. As opposition to the government grew, increasing emphasis was placed upon the March, 1973 Congressional elections as a plebiscite. The country became divided into two camps consisting of all those partíes opposed to the Unidad Popular (CODE) and all those which backed the government (UP). The intensity and bitterness of the campaign made it clear that there was a psychologícal civi I war going on whose resolution did not lie with the outcome of the campaign. It also became increasingly apparent that the government no longer had control of the economic situation as it sought out scapegoats for Chíle's dire economic situatíon. The government's development corporation (CORFO) began offering as "analysis" in its regular economíc reports, statements such as "the current (economic and political) problems are rooted in the actions taken by the enemies of the people."(50) In reality, ít was the Unidad Popular's own economic pOlicíes that had been the most direct cause of the crumbling Chílean economy. Having lost control of the situation by late 1972, the Allende administration was virtually powerless to correct the economic disloca– tions that would create even more serious problems for the country in 1973. Increa::;ed output was required to put the industries in the black, but this required capital and as a consequence of the government's own pOlicíes there were neither savings nor profits to draw upon. As long as prices were heId down and wages increased, profits and therefore the capital accumulation needed to expand the manufacturing output would be ímpossible to achieve-especially since every dollar earned from the sale of copper had to go for the purchase of bad Iy needed food. Even once Vuskovic's succesor, Carlos Matus, decided to loosen price restraints and the Central Bank undertook a policy of regularly devaluing the escudo every fifteen days, itdid nothing to slow down the inflation since the government's "populist politics of consumption" for the poorer classes also dictated, regular wage (46)U.S, C?ngress, House, Commiltee on Internal Security, The Theary and Practice ofCommunism: Marxism lmposed on ChIle, Allende Reflime, Hearings. before the Commiltee on Internal Security, House of Representatives, 93rd Cong., 1st sess., November 15, 1973and March 7and 13,1974, p, 2531. Seealso Chile Hoy, ApriI19-26, 1973, ~1~~ , (47)ln 1972 alone, 3S percent 01 all state industries were in the red, Quarterly Ec'onomic Review. N.O 3 (Septemb¡;)r 25, 1973), p, 17, For.articles critica I 01 how the Unidad Popular ran state industries, see Qut Pasa, February 15, 1973, pp, 7-10; and El Mercurio, May 17, 1973, p, 10, (48)Qut' Pasa, February 15, 1973, pp, 7-10, (49)Certainly, the economic boom 01 Allende's lirst year, including a program 01 vast government spending, provlde? many jobs, HOwever, unemployment did not rise commensurate wi!h Ihe rapid economic decline experien. ced dunng 1972 and 1973, Perhaps this was because; as Allende's Finance Minister Pedro vuskovic is quoted as saying, "a central ~bjeCtive 01 (Unidad Popular) economic policy is lo widen pOlitical support lor the governmenl. See J, Ann Zammlt, ed" The Chileall Road to Socialism (Austin, Texas: University 01 Texas Press, 1973), p, 50. (50)Chile Economic Notes. N,o 15 (March 1, 1973). p, 4, 190