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

reconstruct the efficiency of the economic system in action at the end of 1970, a system seriously damaged in these last years, and, on the other hand, a crisis of basic develop– ment that has been aggravated by three years of inactivity, and, even worse, the destruction of the working capacity already installed in the country, but which can be remedied by applying the appropriate criteria and judgments. In this case, it mainly involves the carrying out of huge projects of infrastructure, and the reestablishing of a dynamic process of economic growth and social development in the production sectors. This is a task that has completely different characteristics to those usually present in the process of economic development, but which closely resembles the problems involved in the reconstruction of Japan and Western Europe after the last world war. Although Chile has not suffeted physical damage, it has been hurt in perhaps a more vital way, by the destruction of the very institutions by which the country is upheld, and through which the organizaiion of the economic system is carried out. The principal institutions of the State were despoiled of their most valuab'le human elements, and their technical and administrative organization broken up bythe intromission of politica! pressu– res. In their turn, business enterprises were affected by these factors. and also by the loss of their work capital and the impossibility of replacing machinery and used equipment. The foreign cooperation necessary to complement the national efforts in this field of activities. is of the greatest urgency, and is needed on conditions so flexible that its rapid and efficient use be ensured. n. THE MAGNITUDE OF THE CRISIS During the last 40 years, the process of Chilean economic development has been affected not only by foreign events, but mainly by internal economic policíes. For one thing, these policies have obstructed the growth and diversification of the export business, vital in an economy of the size of ours, and also, they have limited and misdirected the internar savings and investments efforts. Some policies. introduced in the decade of 1960/1970, have tried to correct these two fundamental bottlenecks. Towards the end of 1970, the perspectives for expansion of the export sector, based on the increase of mineral and non-traditional exports, showed upthe need forthe carrying out of policies (tributary; of fiscal spending and investment. of prices and salaries; of the development of the capital market; of the development and training of human resources, etc.) which would create conditions and incentives for the growth of internal savings, and for an efficient distribution of the human and economic resources of the country. Instead, the political lorces that took over the Government in 1970 considered that the short-term conquest of the political favour of the masses, which they did not have. so as to gain total power and thus mold our society into the shape of a foreign ideology, exclusive and peculiar, was more important than continuing the difficult task of economic consolida– tion, a basis for any system's growth and distribution of social and economic welfare. This beliet led the Administration to adopt economic policies which permitt'ed them, in a sh6rt time, to expand internal consumption above all permanent possibilities, and which could only provide the harvest the Government desired as long as the margin of the economy's idle capacity and the national and international reserves had not been drained. Similarly. the enervation suffered bythe productive system, caused bythe economic policy and the institutional insecurity, could not be overcome by the authorities, who were incapable of creating and administrating an alternative to the productive system they had demolished. The widespread impoverishment of the country, including those masses which were to have been won over, and the hardening in the abuse ot power which was mistakenly tried as a way to vanquish social discontent. allled up, in 1973, to an integral crisis which the Nation and the new Government must now overcome. This process of deteriotarion of the economy and of the social functions vital to a populace, of the erosion of the institutional framework basic to society, which happened in the last three years in Chile. is something very difficultto describe in all its truth and detail. 204