The Third Way's dead end
The "Third Way" is an economic strategy supposedly standing between orthodox neoliberalism and socially orientated development. It's an attempt to sustain capitalist accumulation, and ameliorate the problems that capitalism creates.
Marcus Taylor utilises Chile as a case study to critically analyse "three decades of neoliberal economic, labour and social policies", particularly during the Pinochet era, its aftermath, and the turn to the "Third Way". Examining the Chilean neoliberal model - which was once the poster-child of the International Monetary Fund and World Bank - Taylor outlines the intense contradictions that have polarised Chilean society, and left the Chilean working class in a precarious position.
Parallelling the historical development of Chile, the book is divided into three parts: Chilean society before the military coup of 1973, the authoritarian era of Pinochet and the democratisation period after the dictatorship.
Taylor categorises the period from the 1920s until 1973 as the period of "national developmentalism". This period was characterised by "growing state intervention to engineer changes in social structures and to further the construction of an industrial base". The consequences of this process were the rapid expansion of the state apparatus, and "the escalating class-based struggles that politicised the fundamental relations of capitalist development". The peaks of this period were the Frei government and Allende's "attempted 'Democratic Transition to Socialism'". The military coup of September 1973 violently ended this period. The authoritarian regime it engendered sought different measures to resolve the social conflicts of Chilean society.
The introduction of neoliberal policies was the initiative of the influential Chilean economists - who become known as the "Chicago boys" - who "were avid propagators of the neoclassical critique of Keynesianism developed at Chicago". While the national bourgeoisie saw this as against their interests, their resistance was discounted by the Pinochet regime.
The introduction of neoliberal reforms saw the profound restructuring of the working class, who "were faced with shifting employment structures, decreasing wages and greatly intensified workloads". Chile also further oriented its economy to become a primary-export market, especially in copper.
Taylor highlights the ramifications neoliberal re-modelling had on education, health, and welfare institutions. The restructuring "constituted a key moment in a project to individualise, atomise and depoliticise Chilean society".
The breakdown of Chilean society and the growth of social discontent, which to that point had been controlled through repressive means, culminated to the point where the dictatorship was defeated in the 1988 plebiscite. The new government was a coalition of the Christian-Democrats, and the social democratic Socialist Party, which would be known as the Concertacion.
The Concertacion emphasised a need to move towards "social equity through social policy reforms - growth with equity". The approach sought to increase social expenditure within the neoliberal model - including on health, education, and welfare services. "Although, after two decades of retrenchment in the Pinochet era, the base rates upon which this renewed expenditure built were very low".
Taylor argues that this moderation was limited due to the "threefold structure of constraints". These constraints were the institutional impediments established during the dictatorship, the changing class forces that were a consequence of neoliberal restructuring and a national bourgeoisie that relied heavily on the neoliberal model.
Taylor's work encompasses numerous historical events, with no singular event presented in detail. The reader should look elsewhere, for instance, for a study of the Allende tragedy. Marcus Taylor eloquently dissects the disastrous nature of neoliberalism through the case study of Chile. It is an insightful analysis that is well resourced and comprehensible.