The Uniqueness of Chile

[Lead essayist Lawrence Harrison asked Chile expert David E. Hojman of the University of Liverpool to address James Robinson’s comments on Chile. Here they are. — ed.]

Robinson is wrong about Chile. Given the time constraints, I will give you a few lines which could possibly be followed, explored, developed, or expanded further.

Possibly Chile has always been “unique,” since the beginning of the Spanish Conquest in the 1540s. For example, the huge physical distance from Madrid, plus geographical isolation from neighbors, plus the fact that Chile was too poor to make it worth investing in improving transport and communication links, made it possible to ignore crown rules much more often than elsewhere in Spanish America. Some examples are the Madrid prohibition for crown officials to marry locally, or the Madrid attempt at keeping the control of land and the control of Indian labor, separate. Also, Jose Toribio Medina in his classic study of the Inquisition in Chile has shown how the Santiago political authorities in the colonial period often felt free to challenge the viceroyal and Church (and Inquisition) orders coming from Lima.

Possibly Chile was also “unique” in that political independence from Spain in 1810-1818 was explicitly sought on the grounds that it would make it possible to free international trade, and international trade was encouraged in order to gain popular support for the independence struggle (see references in my Public Choice 2002 paper). As a result the independence movement succeeded, and, possibly even more important because it would be more permanent, free trade unleashed an unprecedented period of economic growth between about 1820 and 1860. Thus, in a matter of a little more than a generation, the poor, or the poorest, Spanish American colony had become a regional power. Moreover, this had been achieved thanks to introducing and encouraging free trade, which means that Chile was familiar with free trade when Pinochet and his “Chicago Boys” brought it (back) to Chile in 1973. Pinochet did not introduce free trade into Chile. He re-introduced it. In 1973 Chile was a fertile ground for free trade ideas.

Robinson’s approach is simplistic in that he considers only GDP (which expanded without interruption only after 1985) as a sign of a country’s progress. But even this is also a sign of “uniqueness.” All Latin American countries have had military dictatorships lasting for 17 years (as Pinochet’s did) or more, often more than once. But Chile is the only country in the region which as a result ended up with sustained growth and stable democratic institutions. This is at least partly because both these institutions and a successful free trade experience were already there when Pinochet took over in 1973. It is true that rural labourers had been exploited for generations. But it is also true that Chile was considered a civilized and free country, and the country of choice, by political refugees from Argentina, Bolivia, Brazil, Ecuador, Peru and Venezuela, among other countries in the region, between 1818 and 1973.

Of course Chile was, and is, a country full of contradictions. For example, Arturo Olavarria Bravo, who is quoted by Robinson (via Loveman) was a prominent member of local Nazi parties both before and after his serving as minister to the Popular Front (as in France’s and Spain’s Popular Fronts of the same period) government of Pedro Aguirre Cerda. So there is a question as to how seriously we want to take what Olavarria is saying. But then Chilean Nazis were also different from German Nazis. For example, Chilean Nazis were more ‘left-wing’, more pro-Chilean (as opposed to pro-German), and more pro-German-Nazis, than the German-Chilean descendants of German colonists in Chile during the period.

Also from this issue

Lead Essay

  • In this month’s information-packed lead essay, Lawrence E. Harrison notes that the role of culture has been badly neglected in serious studies of economic devewlopment. But then, he asks, what explains “why, in multicultural countries where the economic opportunities and incentives are available to all, some ethnic or religious minorities do much better than majority populations?” Harrison reports some results of his recent Culture Matters Research Project, including the finding that “Protestant, Jewish, and Confucian societies do better than Catholic, Islamic, and Orthodox Christian societies…” Harrison provides a number of incisive country case studies, illustrating different ways pre-existing culture can produce economic results, and the ways policy and politics can transform culture.

Response Essays

  • In his reply to Harrison’s lead essay, University of California, Davis economist Gregory Clark writes, “I simultaneously want to endorse [Harrison’s] promotion of culture, and to run screaming from his lethal embrace.” While agreeing that the failure of purely institutional explanations of historical economic growth “opens the door … for culture,” Clark argues that “attempts to introduce culture into economic discussions so far have been generally either ad hoc, vacuous, blatantly false, or void of testability.” Clark points to great variation in economic performance within cultures and religions, and worries that Harrison’s “measures are not a pure probe into the essence of local cultures, but reflect institutions and economic environments that change the real possibilities for people.”

  • In his reply to Lawrence Harrison’s lead essay, George Mason University economist Peter J. Boettke argues that it is not culture but institutions—“the rules of the game that govern the way that people interact with one another”—that are the primary determinant of economic growth. However, culture may be crucial, Boettke argues, since it is “a tool for the self-regulation of behavior” that may raise or lower the cost of monitoring and enforcing compliance with “the rules of the game.” And that can make the difference between the success or failure of growth-conducive institutions and policies such as “private property, freedom on contract, limited scope of regulation, monetary restraint, fiscal responsibility, and open trade.”

  • James A. Robinson of the Harvard University Department of Government argues that Harrison’s measures are insufficient to establish that culture is the x-factor in economic development. For example, Robinson argues that the relative success of certain ethnic and religious minorities may be due to concessions from the majority group, and not the features of the minority culture. Also, Robinson asks, if the economic success of Chinese minorities in other countries is “because they have such a good culture, then why is China one of the world’s poorest countries?” And if Chile’s success lies in its distinctive culture, “then why did it manifest itself so recently?” Robinson concludes that “culture might matter, but doubters like me will not be convinced by the evidence here.”