In the 1960s Chilean voters pushed for greater social reforms, culminating in the election of the Marxist candidate Salvador Allende as president in 1970. Allende redistributed land and nationalized foreign businesses including copper mines, drawing fiery opposition from conservative Chileans, foreign businesses, and the U.S. government, whose leaders felt their economic interests and political power threatened. Chile produced most of the world’s copper, and Allende used mining revenue to pay for housing, education, health care, and other social welfare projects. U.S. president Richard Nixon created a clandestine task force to organize an “invisible blockade” to disrupt the Chilean economy by withholding economic aid and quietly instructing U.S. companies not to trade with or invest in Chile. Nixon instructed his task force to “make [Chile’s] economy scream.”2

In 1973 Chile’s armed forces deposed Allende, who killed himself rather than surrender as the military stormed the palace. A junta, or council of commanders of the branches of the armed forces, took power. Its leader, General Augusto Pinochet (1915–2006), instituted radical economic reforms, giving neoliberal economists a free hand to conduct what they called “shock treatment” to remake Chile into a showcase of free-market economics. Schools, health care, pensions, and public services were turned over to private companies. Regulatory protections for industry were slashed, and land was concentrated into the hands of large agricultural corporations. The U.S. government lavished Pinochet with economic aid to help transform the socialist economy that it had worked to destroy under Allende into a free-market model that the United States promoted elsewhere in the world.

The reforms created a boom-and-bust cycle in which Chile became especially vulnerable to global economic changes. During moments of growth Chile was flooded with foreign investment, and the conglomerates that bought privatized pensions and other services became powerful engines for the Chilean economy. At its peak, Chile’s economy grew at 8 percent per year. The costs of the reforms were just as intense. Income inequality soared: a handful of Chileans tied to big business conglomerates and banks made fortunes, while workers faced job loss and an increasing cost of living. In 1975 the implementation of reforms that cut social programs and caused mass unemployment left half of the country’s children malnourished. The 1982 recession in Chile put one-third of Chileans out of work. Chile’s average growth rate was higher than that of its neighbors, but the peaks and lows of the economy were more extreme.

Pinochet dealt violently with his critics. Thousands disappeared, and tens of thousands were tortured. His intelligence service created Operation Condor, a secret alliance with other South American dictatorships to conduct assassinations and kidnappings across national borders. In 1976 Pinochet’s agents assassinated former Chilean foreign minister Orlando Letelier in Washington, D.C., by detonating a bomb in his car a mile from the White House. These human rights abuses brought international condemnation and resistance within Chile. Groups of women who had lost children or spouses banded together with the protection of the Catholic Church and embroidered quilts known as arpilleras, rendering images of their missing relatives or of other experiences with repression. Catholic leaders used the church’s privileged position to investigate human rights abuses, uncovering mass graves that served as proof of the dictatorship’s violence.

Amid the excesses of Pinochet’s dictatorship, opponents and even many allies looked for ways to curb his power and find the path for redemocratization. After the 1982 economic crisis, businessmen began to join with opposition groups, such as suppressed political parties and the Catholic Church, to press for liberalization. Though some businesses had thrived under the free-market reforms, others struggled to stay afloat amid the boom-and-bust cycles the reforms caused, and they wanted to restore some limits to the free market. Opposition groups proposed a return to democracy that maintained the major elements of free-market reforms. These groups banded together in a coalition called Concertación, calling for Chileans to vote “NO” in the 1989 referendum on whether Pinochet would remain in power. The “NO” prevailed, and Chile held its first democratic elections in two decades.

The opposition alliance in Chile resembled many other alliances around the world that sought transitions from authoritarian rule: political opponents who advocated for human rights joined forces with business groups that sought markets in order to produce a postdictatorship democracy founded on free-market principles and support for human rights. After Pinochet’s dictatorship, socialist presidents continued the basic economic course of privatization and free markets set by Pinochet rather than returning to Allende’s more radical redistribution of wealth.