F. A. Hayek took two trips to Chile, the first in 1977, the second in 1981. The visits were controversial. On the first trip he met with General Augusto Pinochet, who had led a coup that overthrew Salvador Allende in 1973. During his 1981 visit, Hayek gave interviews that were published in the Chilean newspaper El Mercurio and in which he discussed authoritarian regimes and the problem of unlimited democracy. After each trip, he complained that the western press had painted an unfair picture of the economic situation under the Pinochet regime. Drawing on archival material, interviews, and past research, we provide a full account of this controversial episode in Hayek’s life.
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Two lengthy interviews in the leading Chilean newspaper El Mercurio were translated into English and have been the source of much debate. We return to this topic below.
Unless otherwise noted, all translations from Spanish are by Leonidas Montes.
For example, Hayek went to Chile twice, not “several times” (Klein 2007, p. 163) or “a number of times” (Grandin 2006a, b p. 172). Hayek, who failed to get an appointment in the economics department at Chicago and whose views on a number of subjects differed from those of members of the Chicago School, cannot be well-described as the “patron saint of the Chicago School” (Klein 2007, p. 103). Hayek’s first trip to Chile was in 1977, not 1978 (Fischer 2009, p. 328; Cristi 1998, p. 168; Cristi  2014, p. 185), and his subsequent publication in German was not titled “True Reports on Chile” and was not a “defense of economic and social policies under Pinochet” (Fischer 2009, p. 339), but a complaint about the uniformly negative coverage in the western press about countries like Chile and South Africa. For more on what Hayek actually said in the German publication and a critique of Fischer’s account, see Farrant et al. (2012).
We realize that some may question the objectivity of our opinion. For purposes of full disclosure, we note here that Bruce Caldwell is the General Editor of The Collected Works of F. A. Hayek, and has been a member of the Mont Pèlerin Society since 2010. Leonidas Montes has been a member of CEP’s Council since 2005, and from 2009 until 2014 he was the Dean of the School of Government at Universidad Adolfo Ibáñez. Currently Montes is an academic at this non-profit private university that is related to the Valparaíso Business School and the Adolfo Ibáñez Foundation.
Thus Corey Robin, in defending statements he made about Hayek in his Nation article “Nietzsche’s Marginal Children: On Friedrich Hayek” (Robin 2013), referred his readers to five blog posts he had published the year before that carried such colorful names as “Hayek von Pinochet,” “But Wait, There’s More: Hayek von Pinochet, Part 2 (In which we learn what our protagonist had to say about South Africa and what Ludwig von Mises had to say about fascism),” “Friedrich del Mar,” “The Road to Viña del Mar,” and “Viña del Mar: A Veritable International of the Free-Market Counterrevolution.” See http://coreyrobin.com/2012/07/18/when-hayek-met-pinochet/.
Cristi 1998, pp. 146–68, and Mirowski 2009, p. 444 try to establish intellectual connections between Hayek and Carl Schmitt, a person whom Hayek had identified as “the legal theorist of National Socialism” (Hayek  2007, p. 117). For a criticism of Cristi and others, see Shearmur, forthcoming.
The fascism charge regarding Mises is based on a couple of sentences taken from his book Liberalism in the Classical Tradition, first published in 1927 and translated in 1962. Mises regarded the emergence of fascism in the 1920s as a reaction to “the frank espousal [by the communists] of a policy of annihilating opponents and the murders committed in the pursuance of it” and in this context praised fascism as “an emergency makeshift” that “has, for the moment, saved European civilization” (Mises  1985, p. 47; 51). He was offering a comment on a pressing issue of the day. Most of the book, as one might imagine from its title, is a sustained defense of classical liberalism, a doctrine perhaps even more out of favor then than it is now in the age of neoliberalism. In the book Mises systematically examines the foundations of liberalism, and its implications for economic and foreign policy. We might simply point out the other obvious fact that, as a Jew and a classical liberal, Mises was persona non grata among both the Nazi and Stalinist regimes. He and his wife just managed to escape the Nazis and their French collaborators when they fled Geneva, traveling across Vichy France to Barcelona and Lisbon in July 1940, and ultimately landing in New Jersey about a month later (Mises 1984, chapter 4). His apartment in Vienna was ransacked by the Nazis, and the materials they took were later seized by the Soviets and placed in a secret archive in Moscow, where they sit today (Ebeling 2012, p. ix). He is as unlikely a candidate for being considered a fascist as he is for being a communist.
See e.g., the following blog post at Bleeding Heart Libertarians by Kevin Vallier on May 13, 2013, in response to Robin’s Nation article: “Robin ends with a Hayek smear. When Hayek was eighty he said that Pinochet was an improvement on Allende. This was a serious mistake in judgment, but it is not significant for Hayek’s body of work in any way.” http://bleedingheartlibertarians.com/2013/05/on-robins-tenuous-connection-between-nietzsche-and-hayek/ . Greg Ransom expressed doubts that Hayek had even met with Pinochet, writing “Show me the picture.” In fact such pictures do exist.
A “Yes” victory would imply eight more years of Pinochet, but also that congressional elections would be held in 1989.
Prebisch is the main intellectual behind ECLA’s influence (for his life and context, see Dosman 2008). But besides the German background (mainly List and Sombart), Ernest Friedrich Wagemann, a Chilean who had studied in Germany in the 1920s, published his influential “Evolución y Ritmo de la Economía Mundial” in 1933, which was based on the ideas of Sombart (Love 1996, p. 106 and 134) and widely read. In short, “structuralism” and “center periphery” theories were not original to the ECLA but part of a long-standing intellectual tradition.
This involved an agricultural development plan for a region in the south of Chile. Through it, the first connections with Chicago, specifically with Theodore W. Schultz, were established (see Valdés 1995, pp. 109–14).
Patterson first attempted to reach an agreement with Universidad de Chile. Although Rector Juan Gómez Millas viewed the proposal favorably, apparently he could not convince the leftwing economists who were in control of the Faculty of Economics (Valdés 1995, p. 114). Contracts with Pontificia Universidad Católica de Chile were ultimately signed in March, 1956 by Dean Julio Chaná and Theodore W. Schultz, who was then the Chairman of the Department of Economics at the University of Chicago (see also Fontaine A. 1988, pp. 23–4). For more on the “Chicago Boys” in Chile, see Valdés 1995.
With the death of Oscar Naranjo, the congressional seat for Curicó became vacant so elections were called giving the left a surprising 39.2 % of the votes. The results forced a political realignment that favored Frei Montalva.
His political campaign received substantial financial support from the United States government and the CIA (Fermandois 2013, pp. 129–31 and p. 189). Under President Kennedy’s “Alliance for Progress” Chile received additional funding, “around US$720 million between 1961 and 1970, the largest amount, on a per capita basis, given to any Latin American nation” (Collier and Sater 1996, p. 310).
In addition, real wages grew on average 9.7 % per year and the fiscal deficit averaged 2.1 % of GDP.
1970 finished with moderate GDP growth of 2.1 % and inflation of 34.9 %.
In January 1967, the Chilean Senate denied President Frei Montalva permission to visit the United States. And by November 1967 the Socialist Party had declared itself a Marxist-Leninist movement, and characterized revolutionary violence as “unavoidable and legitimate” at its Annual National Congress at Chillán (Fermandois 2013, pp. 154–5).
See the Church Committee Report of the US Senate and recent testimony of former CIA covert officer, Jacques Devine (2014). Hurtado (2013) provides an interesting study of this period that is based on declassified US government documents. It reveals Frei Montalva’s distress about the future, the concern of the US government about the results of the election, and its active participation in trying to prevent Allende from being ratified. Hurtado also shows that some members of Frei Montalva’s cabinet discussed the possibility of a “white coup” that would prevent Allende from being ratified. These discussions and the prospects of a supposed “deal” between Alessandri and Frei Montalva were known by Harberger, who sent a letter to his Chicago colleagues about the situation on September 7, 1970 (see Valdés 1995, p. 241–3).
Much has been written about the rise, fall, and aftermath of Allende and his Unidad Popular government. Six well-researched accounts are Collier and Sater (1996) on the historical situation generally; Fermandois (2013) on the Allende period and its context; Moss (1973) on the Marxist experiment; Valenzuela (1978) on the political situation; and Larraín and Meller (1990), 1991) on economic conditions under the Allende government.
Pedro Vuskovic, Minister of Economics, declared “state control is designed to destroy the economic basis of imperialism and the ruling class by putting an end to the private ownership of the means of production” (quoted in Moss 1973, p. 59).
As the process moved from expropriation of larger (initially 80 ha) to smaller (40 to 80 ha) lots in 1972, social and political confrontation grew more vociferous. In 1971 the Unidad Popular government even expropriated, as a political gesture, a 43 ha farm owned by former President Jorge Alessandri (Fermandois 2013, p. 408). By the end of 1971, nearly 5 million hectares had been seized. By the end of 1973 the uncompensated expropriation had reached approximately 10 million hectares, taken from almost 6,000 farms, constituting 61 % of Chile’s irrigated agricultural land (Loveman 1976, p. 305).
The early successes of the socialist experiment were widely noted and celebrated; see, e.g., “Chile: The Economic Achievements” as reported in The Times, May 22, 1972. In August 1971 Frei Montalva wrote a letter expressing his reaction to the buoyant economic atmosphere to Jorge Cauas (who had been the President of the Central Bank under his administration), Andrés Zaldívar (his Finance Minister in 1968–70) and Sergio Molina (his Finance Minister in 1964–68). In the letter he regretted having not listened while in office to advice that called for implementing policies similar to those of Allende, “as the results would have been much better with great advantage for the technocrats [Cauas, Zaldívar and Molina], the country and, most of all, for the great advantage for our government” (Gazmuri et al. 2000, pp. 802–04).
This interview took place before in the parliamentary elections of March 1973. Nonetheless, at this point the Unidad Popular government still remained popular with the electorate, obtaining a surprising 44 % of the votes. The popular sentiment was reflected in a wall slogan of the time that said “Es un gobierno de mierda, pero es el nuestro (‘It’s a shitty government, but it’s ours’)” (Collier and Sater 1996, p. 315).
Points 5 and 6 of this declaration accused the government of violating the laws and Constitution by attempting to gain “total power, with the purpose of submitting people to the strictest economic and political control of the state in order to attain a totalitarian system absolutely opposed to the representative and democratic system established by the Constitution.” The document concluded by urging the government to restore the rule of law.
It has been suggested that this resolution was a condition that the armed forces insisted upon having in place before they would undertake a coup (Huerta Díaz 1988, vol. 2, p. 80). In fact, the resolution stopped “just short of advocating a coup d’état” (Collier and Sater 1996, p 356). But the text could also be interpreted as a call for further political negotiations: for example Cristi ( 2014, pp. 46–50) argues that the declaration was a call to “restore” the rule of law, not to “destroy it” (for a brief analysis see also Fermandois 2013, pp. 749–53). In any event, the prospect of a coup was in the air. At the end of June there was a coup attempt dubbed el tancazo or tanquetazo. A few days later, on July 3, 1973, The Times published an article titled “Chile at a Standstill, Waiting for a Coup?” On September 1, 1973, The Economist published an article entitled “Near the Road’s End” that began with the words, “Only Chile’s armed forces can halt that country’s slide into civil war.” For a retrospective view of The Economist magazine’s treatment of Chile in the 1970s, when Robert Moss was the editor in charge of Latin America, see “The Pinochet Affair: Blackwashing Allende,” The Economist, January 28, 1999.
In an interview immediately after the coup, Patricio Aylwin - who was then leader of the Christian Democrats and would succeed Pinochet as President - gave some reasons, similar to those stated in the Congressional resolution, for his support of the military intervention. He criticized the Allende government on a number of issues: for creating “the economic crisis, their attempt to retain power by any means, the moral chaos and destruction of the institutional framework, [which] provoked a collective despair and anguish in the majority of the Chileans that triggered the military action.” According to Aylwin, “we are convinced that the so-called Chilean Road to Socialism, the flag that Unidad Popular promoted around the world, had completely failed.” He also noted that “the organized militias of Unidad Popular, a parallel army that was heavily armed, had also planned a coup to get total power. We believe that the armed forces simply anticipated that risk, saving the country from falling into a civil war or a communist tyranny.” A video of Aylwin’s interview may be accessed at https://www.youtube.com/watch?v = owtCH6XP6Qk.
In this highly polarized context, the Christian Democrats were divided among those who welcomed the military coup and those who did not, but the majority supported it. Many believed that the coup was a necessary transition and that constitutional democracy would return quickly with a call for elections (this appears to be the case for Eduardo Frei Montalva; see Gazmuri 2000, pp. 851–71). When the military regime did not relinquish power and human rights abuses persisted, the Christian Democrats became strong critics of Pinochet.
The Reports of the Commission of Truth and Reconciliation, or Rettig Commission of 1991, and of the National Commission on Political Imprisonment and Torture, or Valech Commission of 2004 and 2011, provide detailed and thorough descriptions of the cases of human rights violations in Chile. It lists 2,095 executions and approximated that there were 1,102 disappearances. At least 40,000 people were subjected to political imprisonment in which most suffered from ill-treatment or torture. Some 200,000 people were forced into exile.
Ronni K. Moffitt, an American colleague of Orlando Letelier, traveled in the car with her husband, Michael Moffitt, and was also killed. The fact that an American citizen was a victim of a bomb attack in the capital of the country hardened the determination of the U.S. government to thoroughly investigate this criminal act.
The Chicago Boys in Chile had developed a market oriented program called “El Ladrillo” (“The Brick”) before the coup. Arturo Fontaine A. recalls that the leaders of the Armed Forces had a copy of it a day after the coup (Fontaine 1988, p. 20).
Cauas’ policies reflected plans that had already been designed prior to Friedman’s visit to Chile, as Pinochet pointed out in a letter to Friedman (Friedman and Friedman 1998, p. 594). This was confirmed in a Montes interview of Cauas, May 28, 2014.
During Allende’s government “the average nominal import tariff was 105 % with tariffs ranging from nil for some inputs and ‘essential’ consumer goods to 750 % for goods considered as ‘luxuries’” (Corbo 1993, p. 2) and “[at] the end of 1973 the average import tariff in Chile was 94 %. In June 1979 it was 10 % and covered all imported items, except cars” (Foxley 1980, p. 23).
Codelco, the Chilean copper holding corporation, remained state-owned for “strategic” reasons (for more on the discussion of this issue within the Junta Militar, see Barros 2002, pp. 105–7, and Barros 2005, pp. 135–8). The expropriation of American copper interests had consequences: an international embargo on Chilean copper. The government appointed a group of lawyers led by Julio Philippi to negotiate with all American copper companies. At the end of 1974 the Chilean government reached an agreement that involved compensation of $142.7 million for the American firms.
Perhaps the most famous of these was the pioneering social security reform designed by Minister of Labor and Social Security José Piñera, which was enacted in 1980 and replaced a virtually bankrupt pay-as-you-go system with individual retirement accounts.
These included a new labor law (1979), social security law (1980), health services reform (1980), educational reform, agricultural reform, justice reform and administrative and regionalization reform. The first three reforms were implemented by José Piñera while he was Minister of Labor and Social Security (1978–1980).
For an economic analysis, see De la Cuadra and Valdés 1992.
Although Edwards 1984 analyzes the macroeconomic inconsistencies and mistakes previous to the severe 1982–3 Chilean recession, the crisis was greatly influenced by exogenous factors. Therefore to conclude that the Chilean Chicago experience was a failure is too extreme. As Sebastian Edwards and Alejandra Cox argue “if failure is defined as a significant deviation between the expected (and publicized) overall results of the policies and actual results, then the Chilean experience was a failure. This, however, does not mean that there were no accomplishments” (1991, p. 208, note 1).
After Sergio de Castro had to resign on April 19, 1982 (see Arancibia et al. 2007, pp. 380–6), Chile had five Finance Ministers in the following 3 years.
Hernán Buchi, who had previously worked in government, assumed the position of Finance Minister in February 1985. Buchi had a MA in Economics from Columbia, so he could not be considered a Chicago Boy proper. If it is difficult to explain why the military regime embraced with enthusiasm an open economy and a market oriented approach, it is even harder to explain their perseverance with those programs after the severe crisis of 1982. See the interesting article “Pinochet sends the Chicago Boys back to School” (The Economist, issue 7406, August 10, 1985).
For example, on October 5, 1988, the day of the plebiscite, El Mercurio, the main Chilean newspaper that supported the military regime, published on its front page the results of a survey poll that indicated that the “Si” option would win. The same day the New York Times published the results of a survey by CEP that predicted “No” as the winner (“Pinochet Foes, Bolstered by Polls, Hope to Oust Him in Vote Today,” October 5, 1988). In Chile the latter results were disclosed only after the elections; as it turned out, they were quite close to the actual results (for a discussion of the results and the context, see Méndez et al. 1989, p. 103). During the tense night that followed the plebiscite, Fernando Matthei, a member of the Junta Militar representing Air Force, first publically acknowledged that the “No” option had won (Cavallo et al.  2013, p. 661, and for an account of that long day, see ibid. pp. 637–64). Pinochet would only address the country in the early evening of the next day.
The new Congress building, of somewhat dubious architectural value, was built in Valparaiso by Pinochet with the idea of “decentralizing” the government. Construction began two weeks after the 1988 plebiscite.
For more on this, see Kresge and Wenar, eds. 1994, pp. 130–31.
Hayek always insisted that he recovered prior to winning the Nobel; it was subsequent to, rather than the cause of, his recovery.
See the Editor’s introduction to Hayek  2007, pp. 18–22 for more details.
A representative sample of the various genres may be found by perusing boxes 108, 109, and 167 of the Friedrich von Hayek collection, Hoover Institution, Stanford. Many more instances may be found in separate folders spread throughout the collection.
The invitation had been tendered by Banco Hipotecario de Chile, owned by Javier Vial, one of Chile’s most powerful businessmen; his economic conglomerate – Grupo Vial - would collapse in the 1982 economic crisis.
Some Chilean Chicago Boys probably attended his course in economic theory and perhaps his Workshop in Money and Banking, but the faculty who were really involved with Chile were Arnold Harberger, H. Gregg Lewis and Larry Sjaastad. Rolf Luders was the only PhD Chilean student supervised by Friedman, and in a private interview with Montes on March 31, 2014, he acknowledged that Friedman was “always very busy, and only read the main chapter of my monetary history, which for all formal purposes – given the 42 page length restriction then existing - was my PhD dissertation [A Monetary History of Chile: 1925–1958, University of Chicago, 1968]. He did not read the other chapters that provided descriptive and analytic support.”
On May 31, 1977 the New York Times published an article by Leonard Silk entitled “Nobel Award in Economics: Should Prize Be Abolished?” It begins summarizing the whole situation: “The award of the Nobel Memorial Prize in Economic Science to Prof. Milton Friedman of the University of Chicago last October provoked a storm of criticism over Professor Friedman’s right-wing politics, focused particularly on his willingness to give advice to the central bank and the post-Allende Government in Chile. This storm has been followed by a blast from an earlier Nobel Laureate, Prof. Gunnar Myrdal.” The disagreement among economists had become a very public event.
Hoff’s letter may be found in the Hayek collection, box 147. Throughout his career Hayek would write phrases, epigrams, ideas, quotations, and other notes to himself on notecards. This box principally contains Hayek’s notecards, so has no folders. The letter was folded up amongst the cards.
In his review of Hayek’s The Road to Serfdom, Schumpeter (1946, p. 269) famously characterized both Hayek and the book as (perhaps overly) polite: “…it is also a polite book that hardly ever attributes to opponents anything beyond intellectual error. In fact, the author is polite to a fault…”.
The book is mentioned on notecards in the Hayek collection, box 147, cards that are proximate to the letter from Hoff mentioned in note 53. His targets in the book were to include Samuelson on unemployment, Leontieff on planning, Tinbergen on social justice, and Myrdal on development, with appendices on [John Stuart] “Mill’s Muddle” and “The Neglect of Ludwig von Mises.”
Some were people he did know, like Ralph Raico, Hayek’s former PhD student at Chicago, who in a letter of 13 June 1977 warned him about human rights abuses in Chile. Farrant and McPhail (forthcoming) mention Raico’s letter, which may be found in the Hayek collection, box 14, folder 20.
C. E. Cubitt reports “His visit to Chile was from the beginning a very controversial affair. Many people were unhappy about his going there, some of his friends pleading restraint, others sending him letters of protest and warnings about the damage the visit would do to his reputation. Hayek, however, was not a person to be influenced by words of caution so long as he was convinced of the propriety of his action” (Cubitt 2006, p. 19).
Correspondence and Hayek’s itinerary for the 1977 visit may be found in the Hayek collection, box 54, folder 23.
As on his visit Friedman turned down offers of two honorary degrees from the main universities in Chile “precisely because he felt that acceptance of such honors from universities receiving government funds could be interpreted as implying political approval” (Harberger, quoted in Friedman and Friedman 1998, p. 598), it may be that Pedro Ibáñez wanted to assure Hayek that accepting the degree would not in any way implicate him in endorsing the military regime. Universidad Técnica Federico Santa María was a private university and Ibáñez was a private citizen. Ibáñez also doubtlessly felt genuinely proud of the academic and economic independence of the Valparaíso Business School, one that was funded by the Foundation over which he presided.
“It is a great honour for me to confirm the invitation already announced to you by our good friend Mr. Manuel Ayau.” Letter, Pedro Ibáñez to Hayek, May 25, 1977, in the Hayek collection, box 54, folder 23.
Letter, Manuel Ayau to Hayek, 30 March 1977, in the Hayek collection, box 54, folder 21.
Letter, Hayek to Manuel Ayau, 6 April 1977, Pedro Ibáñez papers. We are grateful to Adolfo Ibáñez, son of Pedro Ibáñez, for giving us access to, and permission to quote from, Pedro Ibáñez papers.
Letter, Hayek to Pedro Ibáñez, 10 June 1977, Pedro Ibáñez papers.
Ibáñez sent Hayek a cable confirming his visit on June 26, 1977. Ibáñez followed this with a letter on July, 1, 1977 thanking Hayek for his personal letter, confirming receipt of his formal acceptance letter to Universidad Técnica Federico Santa María, checking dates of his visit to Chile, and inviting Hayek to his country house. Hayek replied on July 14, 1977 saying that his plans “developed into a four country visit (Chile, Argentine, Brazil and Nicaragua) which I can do only if I stay in each country only from Sunday to Sunday and use the Sundays for traveling.” All correspondence may be found in the Pedro Ibáñez papers.
Cáceres also informs Hayek that Rector Juan Naylor had passed away and that Mr. Ismael Huerta, former Ambassador of Chile to the United Nations, had replaced him. The letters are to be found in the Hayek collection, box 54, folder 23.
Hayek’s ultimate itinerary included week-long visits to Argentina, Brazil, and Portugal, as well as 4 days in Spain, directly following his visit to Chile. See the Hayek collection, box 4, folder 29.
On Wednesday, November 9, 1977, El Mercurio published an article about Hayek’s upcoming visit to Chile, underlining his meeting with President Pinochet on Thursday, November 17. In an interview with Leonidas Montes on April 2, 2014, Carlos Cáceres did not remember whether Hayek had received the final program in Chile or it had it sent to him before. He was inclined to think that it was the former.
Caldwell and Montes, interview of Carlos Cáceres, November 16, 2010.
Cubitt 2006, p. 19, recalls that “He must have meant or hoped to influence Augusto Pinochet, the military Dictator of Chile from 1973 to 1990, for he met him, shook hands, and then asked me to send him a copy of the last chapter of Law, Legislation and Liberty III, namely ‘A Model Constitution’ along with a letter.” According to a report in La Segunda, November 18, 1977, Hayek also mentioned certain ideas concerning a model constitution in his talk before a group of businessmen.
F. A. Hayek, in El Mercurio, November 18, 1977. The statements in El Mercurio are quite similar to those found in La Tercera, November 18, 1977. That newspaper also reports that Hayek addressed the social cost of the economic reforms – lower salaries and unemployment – by justifying them as necessary measures to get inflation under control and arguing that employment and salaries will ultimately recover. When he was asked, “Why do you think that the Chilean economy has progressed?” he replied that market liberalization was a key, and he particularly praised the attempts to lower inflation and to allow the exchange rate to freely adjust. The latter was not to last: between 1979 and 1982 the Chilean peso was pegged to the dollar, with dire results when the 1982 recession hit.
Cáceres expressed “the deepest gratitude of the Business School and myself for having the valuable opportunity to listen your lectures and to discuss your very interesting and innovating approaches about the future of the economic sciences as well as its relationship with the political environment. In several occasions, the President of the Republic as well as the members of the economic committee, have made public statements acknowledging your comments about the Chilean economy.” Letter, Cáceres to Hayek, 28 April 1978, the Hayek collection, box 54, folder 23.
F. A. Hayek, in El Mercurio, Wednesday November 16, 1977.
F. A. Hayek, in El Mercurio, Thursday November 17, 1977.
F. A. Hayek, in Que Pasa, November 17–23, 1977.
Cf. his words in The Road to Serfdom: “Democracy is essentially a means, a utilitarian device for safeguarding internal peace and individual freedom… A true ‘dictatorship of the proletariat’ even if democratic in form, if it undertook centrally to direct the economic system, would probably destroy personal freedom as completely as any autocracy has ever done” (Hayek  2007, p. 110).
F. A. Hayek, Ercilla magazine, November 23, 1977.
During his visit to Argentina, organized by Alberto Benegas Lynch Jr, Hayek met President General Videla on November 22 and also met General Leopoldo Galtieri, then a member of the Military Junta. Galtieri followed Videla as President of the Junta at the end of 1981. In 1982 he orchestrated and led the conflict over the Falklands Islands.
Literally, Ruf means reputation or good name, and Mord, assassination. Therefore Rufmord is like the killing of a good name or its reputation. The exchanges between Hayek and the FAZ are contained in the Hayek collection, box 98, folder 13.
According to Farrant et al. 2012, p. 532, note 9, Hayek had originally turned down Strauss’s offer to publish a piece on Chile there.
Hayek and his wife would spend March 13 to April 10, 1978 in South Africa, which may have provided an additional reason for his including reference to that country in his article.
For a list of letters, see the Hayek collection, box 63, folder 4.
F. A. Hayek, letter to The Times, July 11, 1978.
Hayek’s friend Karl Popper would certainly have disputed his claim about the Thirty Tyrants. In the Open Society and Its Enemies he wrote, “…the number of full citizens killed by the Thirty during the 8 months of terror approached probably 1500, which is, as far as we know, not much less than one-tenth (about 8 %) of the total number of full citizens left after the war, or 1 % per month – an achievement hardly surpassed even in our own day.” See Popper 1966, vol. 1, p. 303, note 48.
F. A. Hayek, letter to The Times, August 3, 1978.
Lord Kaldor, letter to The Times, October 18, 1978.
Gremialismo is the movement founded by Jaime Guzmán in 1967 at Pontificia Universidad Católica de Chile that gave birth to Unión Demócrata Independiente (UDI), the strongest conservative and right wing political party in Chile that was founded in 1983, after Guzmán distanced from Pinochet (see Cristi  2014; Moncada 2006, and Cristi and Ruiz-Tagle 2006).
See, for example, Cristi  2014, p. 59, who refers to “the powerful influence Friedrich Hayek’s thought had in Jaime Guzmán.”
The publication of the first volume of Revista de Estudios Públicos in 1981 had a translation of chapters 12, 16 and 18 of Law, Legislation and Liberty. Successive translations of Hayek’s works would follow.
Jorge Cauas is among those to state that though Friedman’s work was well known in Chile, Hayek’s writings were known only by a very small circle. Cauas admitted that by 1981 he had read only The Road to Serfdom (Montes interview with Jorge Cauas, March 31, 2014).
Arturo Fontaine T. began his introduction to a collection of Guzmán’s writings by declaring “Jaime Guzmán was not an intellectual: he was a politician” (see Fontaine T. 1991, p. 251). This collection was published by Revista de Estudios Públicos just after Guzmán was assassinated in 1991. The assassination was committed by members of a leftist movement, who shot him while he was walking out of the Pontificia Universidad Católica de Chile after lecturing. Others have written similar things about Guzmán. Thus Moncada states that “Guzmán was, before anything, a politician… his thought adapted to the reality he had to live” (Moncada 2006, p. 23), and Cristi, in the preface to the second edition of his biography of Guzmán, notes that he was a “practical thinker” (Cristi  2014, p. 18).
In his comments on our paper, Renato Cristi noted that Guzmán’s library contained copies of Hayek’s work. Enrique Barros, a prominent lawyer with a PhD from Munich – an academic degree rather uncommon at that time in Chile – who had read and studied Hayek for his research, returned to Chile in 1979. Barros confirmed, in private correspondence, that Hayek was then only vaguely known in Chile and that Guzmán had most probably not read him. Oscar Godoy, Dean and Professor of the Political Science Department at Pontificia Universidad Católica de Chile, who had read Hayek in the late 1960s, also recalled in private correspondence that during the 1970s “he could not find in Chile a counterpart to talk about Hayek” and that it was his belief that Hayek “had no presence or impact in Chile.”
Cristi (1998, chapter 7) also claims that, though Hayek often criticized Schmitt, he shared certain of Schmitt’s views; Shearmur forthcoming provides a critique of Cristi’s argument and those of others. Perhaps most relevant for this paper: though Hayek favored “limited democracy,” this was certainly quite different from the corporativist and paternalistic “protected democracy” of Schmitt.
José Antonio Primo de la Rivera, the founder, political leader, and martyr of Spanish Falange, was another important influence on Guzmán (Cristi  2014, pp. 273–4). In private correspondence Cristi also suggested that that among Spanish followers and disciples of Carl Schmitt, Alvaro D’Ors was particularly influential (cf. ibid., p. 100, note 50). On Spanish carlismo, an ultra-conservative and traditionalist Catholic popular movement, officially born in 1833 and which played a crucial role during the civil war in Spain, see Blinkhorn 1975.
The Junta Militar act of September 13, 1973, says that “the promulgation of a new constitution is under study, and the work is led by Professor Jaime Guzmán” (also see Barros 2002, pp. 88–92).
See Barros 2002, 2005. Certainly Pinochet wanted to obtain and secure more power. And he achieved it, but there were also some limits. For example, from the beginning of the Junta Militar a delimitation between the executive and legislative powers was established (Barros 2002, pp. 49–51 and Barros 2005, pp. 72–4). Moreover, as Barros 2002, p. 38 and Barros 2005, p. 63 argues, on legal matters the unanimity of the Junta and its four members was needed. In addition, Barros 2002, pp. 167–8 states that “contrary to the conventional wisdom that the 1980 constitution was designed and dictated by General Pinochet” it “was rather the product of a compromise” (the Spanish version, Barros 2005, p. 208, says that the constitution “was the result of a negotiation”).
For the fear of majority rule, see Sierra and MacClure (2011).
The Council of State began with sixteen members. Two former Presidents, Jorge Alessandri and Gabriel González Videla, were also members of the Council of State, with Alessandri as its President and González Videla as Vice-President. Eduardo Frei Montalva did not accept the invitation to participate.
Montes interview with Carlos Cáceres, June 5, 2014.
The complete text of the Council of State Constitutional project was published on July 9, 1980, in El Mercurio and a developed and a complete version of the so-called “minority vote” of Ibáñez and Cáceres was published the day after.
Alessandri demanded in his letter of resignation that its contents only be made public after the plebiscite. For the important role that Alessandri played as President of the Council of the State in the shaping of the 1980 Constitution see Arancibia 2008, pp. xxi-lxiii. For a comparative study of the Constitutional project of the Council of State and the 1980 definitive Constitution, see Carrasco 1987, pp. 147–223.
In his assessment of personal rights granted by constitutions, Ginzburg 2014, p. 14 argues that the 1980 Chilean Constitution actually protects 16 more rights than its predecessor, the 1925 Constitution.
As part of the political negotiations towards the transition, new changes were added in 1989 to the 1980 Constitution and another referendum followed on July 30, 1989 (for a fascinating account see Godoy 1999; see also Barros 2002, pp. 308–10). With the return to democracy, many antidemocratic dispositions have been revoked. The 1980 Constitution has been continuously and periodically modified, with major changes in 2005.
The 1980 Constitution set in place institutions, such as a Constitutional Tribunal, that would compel the military to hold a plebiscite, finally allowing an “ordered” transition (see Ginzburg 2014 pp. 14–16). Pinochet's defeat in this vote would bring a return to democracy. After the 1988 elections, a notable graffiti offering in Santiago read: “We threw him out with a pencil” (quoted in Barros 2002, p. 307, note 74).
For example, Corey Robin claims that “Hayek admired Pinochet’s Chile so much that he decided to hold a meeting of his Mont Pèlerin Society in Viña del Mar, the seaside resort where the coup against Allende was planned” (Robin 2011, p. 74). Naomi Klein claims that Hayek “traveled to Pinochet’s Chile several times and in 1981 selected Viña del Mar (the city where the coup had been plotted) to hold the regional meeting of the Mont Pèlerin Society, the brain trust of the counterrevolution” (Klein 2007, p. 103). The same claim is made by Greg Grandin, who stated that Hayek “visited Pinochet’s Chile a number of times. He was so impressed that he held a meeting of his famed Société du Mont Pelérin there,” and identifies Jose Piñera, who holds a PhD in Economics from Harvard, as “a Chicago student” (Grandin 2006a, b, p. 172). See also Robin 2012, “The Road to Viña del Mar,” http://coreyrobin.com/2012/07/17/the-road-to-vina-del-mar/
Letter, Carlos Cáceres to Hayek, 28 April 1978, Hayek collection, box 54, folder 23.
Letter, Pedro Ibáñez to Hayek, 7 July 1978, Hayek collection, box 54, folder 23.
Letter, George Stigler to Pedro Ibáñez, 4 August 1978; Letter, Milton Friedman to Pedro Ibáñez, 22 August 1978; both in the Pedro Ibáñez papers.
Cubitt 2006, p. 56, notes that “he was extremely dejected though, to have had to cancel his visit to the United States…”
Letter, Cáceres to Hayek, 10 October 1980, Hayek collection, box 54, folder 23.
After the 1980 meeting, Carlos Cáceres was granted membership in the Society; see the Hayek Collection, box 72, folder 45.
Letter, Jorge Cauas to Hayek, 26 March 1980, the Hayek collection, box 15, folder 16.
Montes Interview with Jorge Cauas, March 31 and May 28, 2014. Puryear 1994, in his account of the role of intellectuals and think tanks during the Chilean transition, refers to CEP as “virtually the only right-of-center think tank to emerge during the 1980s. CEP had been founded in 1980 by a group of economists and business leaders seeking to broaden the legitimacy of neoconservative political and economic thinking by distancing it from the military regime. Fully independent of the government, CEP relied on local business groups and foreign donors for support. It was a serious intellectual enterprise, convening top scholars and policy makers to discuss political, economic, and social issues… CEP helped to establish the identity and legitimacy of a democratic right, and to generate a dialogue with center and left intellectuals” (p. 91).
Ultimately Cauas served as Chairman of the Board, Julio Philippi as Deputy Chairman, Roberto Kelly as Treasurer and Carlos Urenda as Secretary. Hernán Cortés served as Director and Juan Carlos Méndez as Deputy Director (he was the Director of Budget, and a Ph.D. candidate in Economics at the University of Chicago). Other members of the Council were Sergio de Castro (he was Finance Minister then, a former Minister of Economy, and a former Dean of the Department of Economics at Pontificia Universidad Católica de Chile, with a Ph.D. in Economics from the University of Chicago), Arturo Fontaine (Director of El Mercurio), Pablo Baraona (President of Banco Unido de Fomento, a former Minister of Economy and President of the Central Bank, with an MA in Economics from the University of Chicago). The foreign members would include Armen Alchian, Karl Brunner, Ernst Mëstmacker, Chiaki Nishiyama, and Theodore Schultz. Though Milton Friedman and Arthur Seldon were invited, they apparently declined.
Unfortunately there is no copy of Hayek’s letter to Cáceres in the Hayek archives.
Letter, Cáceres to Hayek, 10 October 1980, Hayek collection, box 54, folder 23.
In a letter dated February 17, 1981 to Carlos Cáceres and all those involved in his 1981 visit, Hayek made it clear that “after visiting South America this Spring there is very little prospect that I can repeat such a visit in the autumn to attend the Mont Pèlerin Meeting at Viña del Mar” (Hayek collection, box 54, folder 23). Nevertheless, the organizers of the November 1981 meeting included Hayek as participating on a panel on the topic ‘Democracy: Limited or Unlimited?’ in the preliminary program, perhaps hoping that he would change his mind, or perhaps to indicate that Hayek approved of the meeting, or perhaps simply to draw more attendees, given Hayek’s status as the founder of the Society. Pedro Ibañez informed him of this in a letter to Hayek on January 26, 1981 where he says “we took the liberty of including your name in connection with the theme ‘Democracy, Limited or Unlimited?’” The letter may be found in the Pedro Ibáñez papers.
Hayek was then 81 years old and within three weeks, on May 8, he would celebrate his 82th birthday.
La Segunda, an afternoon newspaper, reported (April 21, 1981) that the meeting was requested by Hayek and that he arrived at 10 a.m. at Frei Montalva’s residence with only an interpreter.
After a welcome by Jorge Cauas, Nishiyama began the conference on Wednesday morning with a paper on “Rational Expectations and a Free Society System” (“Expectativas Racionales y Sistema Social Libre”), followed by Schultz on “The Problem of Poverty in a Free Society” (“El problema de la Pobreza en la Sociedad Libre”). On Thursday Mestmäcker gave a lecture on “Liberty and Monopoly in the Economy and the Media” (“Libertad y Monopolio en la Economía y los Medios de Comunicación”), Alchian spoke on “The Importance of Property Rights in a Free Society” (“La Importancia de los Derechos de Propiedad en una Sociedad Libre”), and Hayek closed with a lecture on “The Ethical Foundations of a Free Society” (“Los Fundamentos Éticos de una Sociedad Libre”).
Hayek’s declaration was noted in both La Segunda, April 24, 1981 and El Mercurio, April 25, 1981. On that Friday Hayek also had an interview with gremialistas Jaime Guzmán, Ernesto Illanes and Hernán Larraín, that was published in Revista Realidad (Number 24, May 1981, pp. 27–35). Some of Hayek’s views on natural law and the Catholic Church clearly conflicted with gremialismo, but in other areas he basically repeated what he had already said in other interviews. It should be noted, however, that on p. 28 the interviewers had a sidebar with various names and Hayek’s short comments on each person. About General Pinochet he supposedly said: “an honorable general,” and about Frei Montalva “I know the type” (he had met him 3 days before). It is not clear what “I know the type” means in this context, nor is it clear how the interviewers generated the list and responses. At least one seems rather odd. About Karl Popper, Hayek supposedly said, “my best friend.” Hayek had never before identified Popper as his best friend; he always reserved that category for his boyhood friend Walter Magg and his LSE colleague Lionel Robbins.
After lunch in a panel moderated by Carlos Cáceres entitled “Chile in the Last 10 Years,” Jorge Cauas gave a presentation on “Fiscal and Economic Policy,” Sergio de la Cuadra on “Foreign Commerce Policy,” Arnold Harberger on “Political Economics and the Exchange Rate,” and Florencio Ballesteros, the main economist from OEA, on “Future Perspectives for Chile in International Organizations.” On Tuesday Larry Sjaastad (Chicago), Sam Peltzman (Chicago) and Armen Achian (UCLA) spoke. On Wednesday, John Pencavel (Stanford), H. Gregg Lewis (Duke), Daniel Gressel (Chicago) and Martin Bailey (Maryland) presented papers. Closing comments were given by Finance Minister Sergio de Castro. See the Hayek collection, box 4, folder 33.
The minutes of the meeting may be found in the Hayek collection, box 15, folder 16.
Hayek, in Que Pasa, issue November, 17–23, 1977.
Burgin 2012 recounts the long-standing divisions and tensions between followers of Hayek and those of Friedman in the Mont Pèlerin Society.
Note that on December 13, 1981, Jaruzelski had declared martial law in Poland.
F. A. Hayek. Letter to the Editor of FAZ, 6 January 1982, Hayek collection, box 169, scrapbook. The letter is mentioned on Corey Robin’s blog, where a translation by Thomas Nephew is provided. Last accessed 13 May 2014. http://coreyrobin.com/2012/07/17/vina-del-mar-a-veritable-international-of-the-free-market-counterrevolution/
Letter, Cáceres to Hayek, 12 February 1982, Hayek collection, box 54, folder 23.
Letter, Ibáñez to Hayek, 19 February 1982, Hayek collection, box 63, folder 8.
Letter, Margaret Thatcher to Hayek, 17 February 1982, Hayek collection, box 101, folder 26.
Hayek wrote to Thatcher on 28 August 1979, 24 April 1980, and to Norman Tebbit (at the time Thatcher’s Secretary of State for Employment) on 17 September 1981 (the letter is not in the Hayek archives, but Tebbit’s response to it of September 29 is there) about union reform, and his 1980 IEA pamphlet “1980’s Unemployment and the Unions” elicited dozens of newspaper articles and letters of response. The Thatcher and Tebbit letters are in the Hayek collection, box 101, folder 26. As the power of unions was a theme for Hayek, it is possible that he was recommending changes similar to those enacted in the 1979 labor reform in Chile. It included voluntary affiliation, collective negotiations only at the firm level and a maximum limit of 60 days for a strike (after that period, workers were considered as having resigned). For more on Hayek’s letters to the Times during this period in the context of the Thatcher-Hayek relationship, see Farrant and McPhail, manuscript.
These translations were not always accurate, so when necessary Montes has corrected them, and those corrected versions are what appears here. The interviews appear to have disappeared from the web: a recent search could not locate them.
In November 1979 the American embassy in Tehran was overrun and fifty-two Americans were taken hostage. An attempted rescue operation launched the next April was scrubbed when the helicopters involved experienced difficulties at the staging area. On departure from the staging area one of them crashed, killing eight servicemen. The humiliation that the failed rescue attempt created played a role in the election of Reagan. The hostages were released by Iran the day before Reagan took office.
Cf. Hayek in The Constitution of Liberty  2011, p. 334, “…it may become a real danger to liberty if too large a section of economic activity comes to be subject to the direct control of the state. But what is objectionable here is not state enterprise as such but state monopoly.”
The characteristics of laws that protect liberty – that they be known in advance, general, abstract, equally enforced, and, to be effective, that the legitimacy of government according to the rule of law be widely accepted – is the subject of chapter fourteen of The Constitution of Liberty, titled “The Safeguards of Individual Liberty.”
The emphasis on how a movement away from a market system would adversely affect the world’s population would become an increasingly important theme in Hayek’s later work; see, e.g., The Fatal Conceit, chapter 8, “The Extended Order and Population Growth.”
The second volume of Law, Legislation and Liberty was titled The Mirage of Social Justice; in an essay published first in 1946 he had said: “We must face the fact that the preservation of individual freedom is incompatible with a full satisfaction of our views of distributive justice” (Hayek  2010, p. 65).
Hayek first visited Argentina, invited by Alberto Benegas Lynch, in April-May, 1957. Recall that the interviewer is Argentinian; Hayek is expressing his disappointment with how things turned out in her country. Hayek would support Thatcher’s position when the Argentinian invasion of the Falklands led to war in April 1982 (for example, see his letter to the Editor of The Times published on February 17, 1983).
See, e.g., Hayek, The Constitution of Liberty  2011, p. 166: “Liberalism…is concerned mainly with limiting the coercive powers of all government, whether democratic or not, whereas the dogmatic democrat knows only one limit to government – current majority opinion. The difference between the two ideals stands out most clearly if we name their opposites: for democracy it is authoritarian government; for liberalism it is totalitarianism. Neither of the two systems necessarily excludes the opposite of the other: a democracy may well wield totalitarian powers, and it is conceivable that an authoritarian government may act on liberal principles.” Cf. Hayek  1967, where he argues that the unlimited power of the majority is essentially anti-liberal, and Hayek  1978, p. 143, where he states that “liberalism is thus incompatible with unlimited democracy.” As noted, much of his 1970s trilogy Law, Legislation and Liberty is devoted to the theme of the dangers of unlimited democracy.
Hayek  2007, p. 148: “There is no reason why in a society that has reached the general level of wealth which ours has attained the first kind of security [that is, the certainty of a given minimum of sustenance for all] should not be guaranteed to all without endangering general freedom.”
For an early critique of this view, see Hamowy 1961.
The third volume of Law, Legislation and Liberty had been published two years earlier, in 1979, but Santa Cruz, as we already noted in section 6, apparently thought that the book was forthcoming, so in the text of the interview she has him saying “in my next book” when referring to it.
See Hayek 1973, chapter 4, “The Changing Concept of Law.”
Keeping in mind that the 1980 Constitution that had been proposed by Pinochet and the Junta Militar stipulated elections in 1988, Hayek doubtless had the Chilean case in mind when he referred to a self-limited dictatorship.
For more on Hayek’s implicit theory of transitional dictatorship, see Farrant and McPhail forthcoming.
Cubitt 2006, p. 19.
In 1962 Hayek had sent a copy of The Constitution of Liberty to the Portuguese dictator Salazar. Cristi 1998, p. 168 notes that an early draft of Law, Legislation and Liberty, one that was written before the Chilean coup, contained a sentence deleted from the published version: “There may even exist today well-meaning dictators brought to power by a breakdown of democracy and genuinely anxious to restore it if they merely knew how to guard it against the forces which have destroyed it.”
Perhaps his most eloquent statement comes from the Epilogue to The Constitution of Liberty, “Why I Am Not a Conservative”: “I have made it clear earlier that I do not regard majority rule as an end but merely as a means, or perhaps even as the least evil of those forms of government from which we have to choose. But I believe that conservatives deceive themselves when they blame the evils of our time on democracy. The chief evil is unlimited government, and nobody is qualified to wield unlimited power. The powers which modern democracy possess would be even more intolerable in the hands of some small elite” Hayek  2011, p. 525.
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An earlier version of this paper was presented at a Center for the History of Political Economy workshop at Duke University, then at the 2014 History of Economics Society Meeting in Montreal. We are very grateful for comments by Robert Barros, Renato Cristi, Jose Díaz, Andrew Farrant, Joaquín Fermandois, Alejandro Foxley, Alexander Galetovic and José Zalaquett. Of course, the usual caveats apply. We also thank Carlos Cáceres, Jorge Cauas, Adolfo Ibáñez S. M. and Rolf Luders for providing important information for this paper.
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Caldwell, B., Montes, L. Friedrich Hayek and his visits to Chile. Rev Austrian Econ 28, 261–309 (2015). https://doi.org/10.1007/s11138-014-0290-8
- F. A. Hayek
- Chicago boys
- Augusto Pinochet
- Salvador Allende
- Milton Friedman
- Centro de Estudios Públicos (CEP)
- El Mercurio