The Chicago Boys now and then

Following Augusto Pinochet’s coup of Salvador Allende’s Chile in 1973, a group of Chicago-trained economists, now known as the ‘Chicago Boys’, were sent to Chile to restructure the nation’s economy. Trained in the Chicago School of economic theory, this group pushed broadly for free-market policies that were closely tied to the thought of Milton Friedman, under whom many of these economists trained. Friedman visited Chile for six days at the invitation of the Chicago Boys in 1975, where he had a short meeting with Pinochet himself. Friedman’s entanglement with Pinochet’s regime led to many criticisms in America; his Nobel Laureate award ceremony was interrupted by scores of protests. When interviewed about these in Newsweek in 1976, Friedman responded that “for an economist to render technical economic advice to the Chilean government,” was like “a physician to give technical medical advice to the Chilean government to help end a medical plague.”[1]

Friedman’s simile is emblematic of a larger problem when it comes to talking about modern economics. ‘Ideology’ is positioned in contradistinction to ‘technical,’ which denotes a scientific order that functions not on the ‘subjective’ beliefs but ‘objective’ expertise, such as the medical expertise of the physician. Economic policy is thus accorded a scientific status within Friedman’s positioning. It is a technical order that is self-legitimating; that is, legitimated on its own apparent scientific rigour. In the case of Pinochet’s Chile, the rise of the ‘scientist’ form of economics meant that when it came to questions about the complicity of the Chicago Boys – and of the United States at large – in a politically repressive regime, its widespread political abuses were separated from the ‘technical’ concern of economic reform.

Friedmann and Pinochet. Source: Netakias.
Friedmann and Pinochet.
Source: Netakias.


The divorcing of the ‘economic’ and the ‘political’ in these matters can be seen in popular responses to working with the militant regime. When the World Bank recommended a loan of $33 million to Pinochet in 1976, its President Robert McNamara justified the choice by stating “there is no room for political considerations in that type of situation.”[2] Similarly, when US Secretary of the Treasury William Simon returned from a visit to Chile in 1976, he praised the “economic freedom” he saw in the regime, while noting Pinochet assured that “progress was being made” on the question of human rights.[3] Both these characterizations depoliticize the economic sphere, resulting in a curious state of affairs in which politics thought of as reprehensible could co-exist with a economic sphere that warranted praise. One could, within this particular figuration, be theoretically politically repressed while economically free; how that worked in practice, was perhaps a question for those in another discipline.

Yet a closer examination into the historical realities that underpineed the Pinochet problem demonstrates how fragile this economic-political distinction really is. Compare, for example, the World Bank’s willingness to grant loans to Pinochet’s Chile on the basis of ‘political neutrality’ against its suspension of loans to Salvador Allende’s socialist Chile from 1970 to 1973.[4][5] A choice made even more suspect, moreover, when considering that, at the time, the United States funded 20% of the World Bank’s grants.[6]

Since-declassified US government documents reflect an intention to consolidate Pinochet’s regime to prevent the re-emergence of Allende’s populist leftism. When then-American Ambassador to Chile David H. Popper presented an internal policy paper on American economic aid in 1976, Foreign Service Officer Richard J. Bloomfield privately characterized Popper’s stance as such: “we must provide economic and military assistance; in fact by page 25, we are worrying about our responsibilities for making the Junta’s economic program a success. Why? Because preventing the re-emergence of a Chilean Government essentially hostile to us is our chief interest and the human rights problem is secondary.”[7] The question of economic aid, in Popper’s reasoning, is deeply related to the political question of Chile’s relationship with the United States; economic aid is deployed as a political action in order to consolidate one ideological regime and prevent the emergence of another.[8]

The case of Chile shows the ostensibly ‘neutral’ role of economics obscured the deeply political field in which the debate about Pinochet, the Chicago Boys, and the United States Government took place. The apparently sterile operation that was economic reform was, in fact, enmeshed in a larger web of competing political objectives. While this does not mean that the actors who touted the scientism of economics were necessarily politically sympathetic to Pinochet per se, it is worth questioning the limitations and implications of their logical reasoning. The attempt to bracket questions of political ‘ideology’ when dealing with ‘technical’ economic matters, it appears, only perpetuated existing political hegemonies, which remained obscured yet effective by the language of neutrality. Without a public, self-reflexive discourse about how these economic considerations impinged on, and worked within, a certain political order, the ‘technical antipolitics’ of economics, rather than divesting ‘the economic’ from political implications, in fact implicitly signed onto the continued perpetuation of existing hegemonies through the guise of ‘neutrality’. Given the disparity between the ‘technical’ language of economics, and the social and political problems in which it always becomes entangled, today we need to return to the basics; to reconceptualize the foundational assumptions of economics.




The influence of the Chicago Boys demonstrates quite clearly what has subsequently been described as an ‘ontological failure’ in economics; the failure of economics to interrogate the very epistemic premises on which the discipline is found. By casting a priori their work in a purely ‘technical’ realm, the Chicago Boys precluded any consideration or discourse about the political dimensions of their work. Although the world, however, has changed drastically since the 70’s, the impulse to regard economics as a self-regulating techne unto itself, has remained.

We are at a time marked by multiple crises. Inequality is rising to levels beyond precedent; grassroots democratic action has proven to be increasingly impotent in the face of finance capital; 2008 crisis has subsequently witnessed not the dismantling, but reinvigoration, of neoliberal ideals. Economics as a discipline has come to shape and inform the methods of other disciplines, as there is an increasing convergence (or one might say, absorption) between economics and the methods deployed by political science, and the legal institution.[9] Yet in spite of its ubiquitous reach, economics itself has remained relatively impervious to external critique. What has made this possible is the very sustenance of the narrative that positions economics as a technical, ‘scientistic’ discipline predicated on a certain expertise; a narrative, the Chilean case demonstrates, that quite easily collapses upon further examination.

The lead-up and reactions to the Wall Street Crash – and to financialization in general – has affirmed the almost untouchable status of a discipline that bleeds into all frames of daily life. Headlines are rife with examples of the ‘gatekeepers’ of economic knowledge denigrating those who dare enter on the sweeping basis that these ‘outsiders’ just don’t understand. Take, for example, JPMorgan Chase CEO Jamie Dimon’s infamous speculation during a luncheon at Chicago’s Executives’ Club, held in June of last year, that Senator Elizabeth Warren didn’t ‘fully understand the global banking system’. Bernie Sander’s presidential campaign was commonly met by liberals echoing the same sentiment; that his ‘pie-in-the-sky’ dream sounded nice, but was economically unviable.[10] This was notably seen in a spat between University of Massachusetts-Amherst economist Gerald Friedman and the former Chairs of the Council of Economic Advisors, namely Alan Kreuger, Austan Goolsbee, Christina Ro. After Friedman published a study estimating the effect of Sander’s proposed economic plans, which included optimistic calculations such as a 3% rise in GDP and an average $22, 000 increase in  median household income, the Chairs responded with an open letter to Sanders and Friedman taking issue with the credulity of Friedman’s claims; ‘as much as we wish it were so’, they write, ‘no credible economic research supports economic impacts of these magnitudes’.

In her review of Anna Kornbluh’s Realizing Capital: Financial and Psychic Economies in Victorian Form for the Los Angeles Review of Books, Michelle Chihara discusses the Dimon-Warren dispute, observing that “his accusation lacks a crucial element that’s usually part of mansplaining: the explaining. Dimon never specified Warren’s mistake, nor was he expected to specify it”.[11] A similar maneuver is made in the CEA’s dismissal of Friedman’s research; while the open letter takes issue with Friedman’s study, stating that it ‘undermines the credibility of the progressive economic agenda’ and ‘runs against our party’s best traditions of evidence-based policy making and undermines our reputation as the party of responsible arithmetic’, notably missing is the explanation as to how Friedman runs against the Council’s rigorous arithmetic sanctimony. James K. Galbraith, former executive director of the United States Congress Joint Economic Committee, responds to the CEA letter noting ‘you write that you have applied rigor to your analyses of economic proposals by Democrats and Republicans. On reading this sentence I looked to the bottom of the page, to find a reference or link to your rigorous review of Professor Friedman’s study. I found nothing there’.

James K. Galbraith. Source: INet.


It could almost be a title of a mystery novel: ‘Modern Economics at the Case of the Missing Explanation’. The proliferation of experts wielding their expertise in a claim to authority without following up as to why, is symptomatic of how economics itself has transformed into a self-legitimating technical order that produces ‘objective’ knowledge far from the reach of the general person. We see here echoes of the Chicago Boys; to ‘know economics’ is to ‘know medicine’; you wouldn’t question your doctor’s medical advice, so why not quiet your doubts and listen when your economist or banker professes to ‘know better’?

Perhaps it is true; that Goolsbee knows better than Friedman; Dimon, more than Warren (unlikely). Yet to merely shut your opponents down by waving some authoritative flag stating that the others simply ‘don’t know enough’, is lazy, unfair, and counter-productive to a conversation that puts in the line the very livelihood of all people, even the ‘unenlightened laymen’ evicted out of their homes in 2008. Perhaps, however, what is more piqued in these encounters is not that Warren and Friedman have their economics knowledge wrong, but that their very actions pull apart the fragile narrative bolstering the technical order of modern economics.

The ‘explaining’, in many cases, is supposed to be contained within, and resolved by, the intricate technical ‘truths’ of economics itself. The ‘technical expertise’ of economics represented in narratives concerning the Chicago Boys has been further inundated with an increasingly niche set of algorithms, formulas, and inextricable jargon in our modern-day world of ‘finance’. Economics is thus rendered a technical truth, but a ‘truth’ so complex that it cannot possibly be explained to the layperson; or, in Warren’s case, to a Harvard Law School professor, expert in bankruptcy law, and founding member of the Consumer Protection Bureau. The result is a ‘fetish’ of the supposed technicality of economics as a truth unto itself; one that cannot possibly be explained, but whose intrinsic authority is so unquestioned that it can be effectively wielded as a trump card. One immediately thinks of James Carville’s oft-repeated (and arguably, often misrepresented) slogan for the Clinton campaign, “[It’s] the economy, stupid!”




In a podcast with the Huffington Post, Warren refers to the Dimon incident, stating “the problem is not that I don’t understand the global banking system. I fully understand the system and how they make their money. And that’s what they don’t like about me.” Perhaps the problem is not then that Warren misunderstands the system, but rather that she understands it to the point of its demystification. When figures like Dimon and the Chairs of the Council of Economic Advisors shut out or de-legitimate outside voices on the basis of a basic ‘misunderstanding’ while refusing to engage with the actual content of debate, they too practice a decidedly unrigorous, incredulous epistemic maneuver. It is here that one can also stake an intervention; not in the murky morass of economics’s technical debates, but rather, starting from the outside, question and challenge the a priori ontological assumptions of the discipline.

When questioned about the political implications of his work with Pinochet, a Chicago Boy was quoted as saying: “I don’t understand what political power the economic team could have”; “we are making a policy in order to lose power, so how can we be concentrating it?”[12] Here, this unnamed economist seems to be making two directly contradictory maneuvers. First, he disavows the possibility that he may, through his work restructuring the Chilean economy, any political power whatsoever; second, he then suggests that rather than concentrating state power, the Chicago Boys are rather promoting freedom through its loss. The understated assumption at work here is thus: expanding free markets expands the possibilities of political freedom.

Capitalism and Freedom. Source: Bauman.
Capitalism and Freedom.
Source: Bauman.


Who best to help dismantle these artificial walls than the father of modern economics himself? In his 1962 book Capitalism and Freedom, Friedman himself writes about the intimate relation between economics and politics, noting:

“It is widely believed that economic arrangements are one thing and political arrangements another, that any kind of economic arrangement can be associated with any kind of political arrangement. This is the idea that underlies such a term as “democratic socialism.” The essential thesis, I believe, of a new liberal is that this idea is invalid, that “democratic socialism” is a contradiction in terms, that there is an intimate connection between economic arrangements and political arrangements, and that only certain combinations are possible.

It is important to emphasize that economic arrangements play a dual role in the promotion of a free society. On the one hand, “freedom” in economic arrangements is itself a component of freedom broadly understood, so “economic freedom” is an end in itself to a believer in freedom. In the second place, economic freedom is also an indispensable means toward the achievement of political freedom.”

The practice of economics, Friedman himself suggests, cannot be separated from the sociopolitical structures of the world in which it operates; it is, rather, through economics itself that political freedom can be secured.

This has not been an article critiquing the technical practices of economics. It has not sought to delineate its empirical applications, nor its disciplinary methods. It rather explores the way in which ‘economic knowledge’ has been rhetorically deployed to foreclose and de-legitimate certain political positions, while acting in the service of others. To draw out the otherwise hidden political maneuvers that underlie the public avowal of political neutrality and scientific techne.

Antonio Gramsci’s theory of ‘hegemony’ famously positioned ideology as something not only imposed by force from above, but also drawn from ‘spontaneous consent’, that is, the insidious and invisible manufacturing of assent by the dominant class. In Gramsci’s cultural hegemony, subordinate classes do not face oppression through visible means of coercion, but rather are induced to subconsciously accept a state of affairs antithetical to their own interests. Ideological positions become neutered and congealed into ‘common sense’; any thought or speculation to the contrary are swept away as far-fetched phantasms. And that is why external critique is so valuable; to sweep away the clutter and assumptions masking self-evident truths. We must continuously question and challenge positions taken to be self-evident truths; that begins with expanding the parameters of discourse. The insulated, privileged position of modern economics cannot stand so long as it continues to inform and shape the very ways in which we live. ‘Only Goldman’s money was treated as real in the last crisis’, Chihara writes; we cannot let this remain as such.


[1] In an interview with Newsweek, June 14 1976.

[2] Quoted in Philippines Daily Express, Manila, May 21 1976; cited in Robin Broad’s Unequal Alliance: The World Bank, the International Monetary Fund, and the Philippines, 1988. 47.

[3] Tom Wicker, ‘A Two-Faced Policy for Chile’ in The Spokesman Review, 16 June 1976, p. 4.

[4] Catherine Gwin, ‘U.S. Relations with the World Bank, 1945 – 1992’ in The World Bank: Its First Half Century, Volume 1, ed. Devesh Kapur, John Prior Lewis, Richard Charles Webb (1988) pp. 256.

[5] When prompted on this apparent double standard in a New York Times interview in 1978, McNamara once again distinguished between the ‘political’ and the ‘economic’, responding that “we do not, we have not in this institution allowed our lending policy to be determined by civil rights[…] our lending policies have been dictated, both under Allende and under Pinochet, entirely by economic considerations.”[5]

[6] NBC, ‘The Whole World’s Bank’ May 23, 1978.

[7] Richard J. Bloomfeld, Department of State Memorandum. ‘Ambassador Popper’s Policy Paper’ July 11, 1975. National Security Archives at George Washington University. Written in a private correspondence to US Undersecretary of State William D. Rodgers.

[8] In The World Bank: Its First Half Century, Catherine Gwin writes that “the suspension of lending in 1970 – 73 was cited in the 1982 US Treasury Report as a significant example of the successful exercise on the Bank.”[8]

[9] As explored in Bernard Harcourt’s The Illusion of Free Markets, (Cambridge: Harvard University Press, 2011).

[10] ‘Pie-in-the-sky’ was a common rejoinder used by the Hillary Clinton camp against Bernie Sanders.

[11] Michelle Chihara, ‘What We Talk About When We Talk About Finance’, in Los Angeles Review of Books, September 18 2015.

[12] Julia Paley, Marketing Democracy: Power and Social Movements in Post-Dictatorship Chile, (Berkeley: University of California Press, 2001), 199.

Rebecca Liu is an editor for the King's Review. She holds an MPhil in Political Thought and Intellectual History from the University of Cambridge and tweets at @becbecliuliu