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

4. Statement by Professor Paul Rosenstein-Rodan Minister LÉniz highlighted the extent 01 economic devastation in Chile. Let me lor 4 or 5 minutes, in a bird's eye view, as it were put events in a historic perspective. Chile has the third highest income per head in Latín America, a homogeneous population and a good education system, capable 01 producing and using the technical cadres and personnel required lor modern development. .' Santiago is perhaps one 01 the most lively centers 01 intellectuallile in Latin America. Combined with its human capital, Chile has also an excellent economic endowment, ample natural resources and enough good land to ensure an adequate lood supply. Yet, the socio-economic syslem changed rather slowly in the lirstquarter 01 the century after the World War 11 and while a great deal 01 progress and the basis lor lurther advance were realized during the Frei administration, political exacerbation increased in the second hall 01 the Frei administration alter 1967, And the verdict 01 history may be: too IitUe and too late, Let me note in passing, that while the income distribution in Chile was not good, il was less unequal than in most Latin American countries, There was hardly aman with more than $10 million (although there were families with five or six men, each olwhom had $ 5 million, while in other contries with hall Chile's income per head there were dozens 01 people with more than $ 20 million each), Yet, the class war broke out lirst in a country with less unequal income distribution. The politics 01 Chile, until1970, were very similar lo those 01 the Third and Fourth French Republic, with Iwo 'fundamental differences: they had neither a De Gaulle, nor aJean Monnet. Well, now they have aJean MonneL Allende's economic program consisled of a shorl-run would be Keynesian policy and the long-run policy 01 transition lo socialism, "strucluralist" and vaguely articulated. The short-run program had three aims: (1) Redislribution 01 income; (2) Reaching Ivll employment; (3) Slabilizing prices and abolishing inllation, Absorbing excess capacity by increasing demand would lower cosl and would lead to a self-linanced expansion, Their algebra may have been partly righl, but the arithmelic was hopelessly wrong, The redistribution 01 income could not possibly bemaintained. This is not only obvious now, but should have been then. Excess capacity in industry may have been 30 to 40 per cent, but it was not equally distributed among the wage goods for which demand was increasing, Many 01 Ihe imports and consummer goods had lo be imported. Moreover, there certainly was no excess capacity in agriculture, and the agricultural policy was more likely to reduce rather Ihan to increase agriCultural production. Almost $ 400 million 01 foreign reserves as well as excess inventor.ies and stocks were spent on con– sumption, not on investment. It would have been a simple arithmetical exercise to calculate that loreign exchange reserves and stocks would have been exhausted within two years. Only an increase in production, which requires increase in investment, would provide lor il. The decapitalization 01 enterprises, both in the public and prívate sectors, reduced inves– table lunds. Investment in lact lell in 1972 and 1973 and in 1973 was O per cent il you take . ínto account the loss of capital (foreígn exchatrge reserves and stocks). This part 01 Allende's policy was more Populism than Socialism, Even Fidel Castro is supposed to have observed: "Marxist socialism ís a revolution 01 production -this is a 219