From Chicago to Chile: A Neoliberal Experiment

Before 1970, Chile was considered one of Latin America’s most advanced constitutional democracies. Yet, this political stability failed to mask deep social inequalities. Land ownership was concentrated in the hands of a few elite families. In rural areas, millions of people lived under semi-feudal conditions. This reality fueled demands for land reform and strengthened union movements in the 1960s. Particularly in the mining and agricultural sectors, an increasingly organized working class began to rise against the structural injustices of the economic system.

These social tensions laid the groundwork for Allende’s electoral victory, while simultaneously raising alarm bells in Washington. In the middle of the Cold War, the democratic election of a Marxist president triggered a coordinated response from the United States. U.S. intervention in Chile was not merely diplomatic. It was operational and systematic.

Between 1970 and 1973, the CIA financed media outlets in Chile, encouraged factions within the military, and supported economic sabotage. Internal U.S. documents revealed that companies such as ITT (International Telephone and Telegraph) worked closely with the U.S. government to protect their interests by backing Pinochet. The words of President Nixon and Secretary of State Henry Kissinger, "make the economy scream," made clear that Allende’s overthrow was not just an internal rupture, but part of a broader geopolitical play.

Milton Friedman was globally known as one of the most fervent advocates of individual liberty and market freedom. In his seminal work Capitalism and Freedom, he argued for minimal government intervention and a robust defense of civil rights. Yet, in a striking contradiction, he also became the economic architect of one of the most authoritarian regimes in Latin America.

In 1975, Friedman met directly with General Pinochet and proposed a “shock therapy” program. For the Chilean people, this therapy meant not just a drop in inflation. It meant mass unemployment, deepening poverty, and the dismantling of the welfare state.

Naomi Klein, in The Shock Doctrine, refers to this as “economic violence.” Violence, she argues, need not always be physical. It can be administered through policy, stealthy, cold, and devastating.

Juan Gabriel Valdés, in Pinochet’s Economists, described this alliance as “an ideological crusade legitimized through technical language.”

When economic models collide with human bodies and memories, the result is not merely data. It is trauma.

Imagine a country nestled between the Andes and the cold Pacific shore, where hope once glimmered in the eyes of its people until darkness fell. A darkness not only brought by tanks, but also by numbers, charts, and economic reports.

The neoliberal prescriptions born in the economics department of the University of Chicago packaged under the name “shock therapy” transformed Chile into a laboratory. In this experiment, there were no people, only markets.

This story was not only told by historians but by a novelist, Gabriel García Márquez. And the story he told was not only Chile’s. It was about how truth can merge with literature.

In 1955, an academic agreement was signed between the University of Chicago and Chile’s Catholic University. This was not just an exchange of syllabi, but an ideological transfer. Figures such as Friedman, Becker, Harberger, and Schultz trained young Chilean economists in the harsh logic of the free market. In time, they would become known as the “Chicago Boys.”

This academic export was not a neutral theory. It was the bearer of a Cold War worldview. The idea that no alternative to capitalism could be tolerated turned Chilean soil into a site of experimentation.

On September 11, 1973, General Pinochet launched a brutal military coup, not only overthrowing a government, but also imposing an economic system by force.

In 1975, Friedman visited Pinochet and personally proposed his shock therapy. The state withdrew from education, healthcare, and pensions. Allende’s nationalizations were swiftly reversed, and key assets were sold to private and multinational interests.

In García Márquez’s words: “The military junta that took power wanted to impress the world by showing that the country was swimming in wealth. So they privatized everything Allende had nationalized, sold whatever had value to private entrepreneurs and multinational corporations. As a result, there was a boom in luxury goods, and public works became all about spectacle. Thus, the illusion of wealth and balance was created.”

Miguel Littín was one of thousands forced into exile after the coup. What set him apart was that, in 1985, he returned to Chile in disguise posing as a Uruguayan businessman to document what had happened.

Littín’s hidden camera footage exposed both a society’s suppressed memory and the human cost of an imposed economic model. Gabriel García Márquez immortalized this extraordinary act in his book Clandestine in Chile. The book is not just an interview. It is a literary rendering of economic violence.

García Márquez was no ordinary writer. He had left law school to pursue journalism and never hesitated to critique both Colombian politics and foreign interventions.

He traveled Bogotá in a bulletproof, bombproof Lancia Thema, chauffeured by Don Chepe, a former guerrilla, and followed by as many as six undercover agents. In a country where nearly 2,000 people were murdered and hundreds kidnapped each month, García Márquez chased the truth.

Over the previous 15 years, 1.5 million Colombians had been displaced by violence. About 40% of the country was under the control of Marxist guerrillas and right-wing paramilitaries. And García Márquez kept writing.

The world may know him for One Hundred Years of Solitude, Chronicle of a Death Foretold, or Love in the Time of Cholera, but his writing extended far beyond magical realism. In Clandestine in Chile, he fused literary form with lived testimony collapsing the boundary between fiction and documentary.

Today, neoliberalism continues to strain the social fabric not only of Chile, but of many nations: rising inequality, a shrinking middle class, the human costs of climate crisis. What happened in Chile is not a historical scene. It is a living echo.

From Argentina to Turkey, India to the United States, the same questions return: at what cost is economic growth achieved? Can human dignity, public services, and social justice be sacrificed to market logic?

If the “efficiency” promised by neoliberal policy only enriches the rich and silences the poor, then the crisis we face is not merely economic. It is moral.

In the words recorded by Gabriel García Márquez, this story still tells us: truth is not merely explained. It is remembered, narrated, lived.

How do we measure the success of an economic model? Through numbers or through the silence of those who wait in hunger?