Home/cascade-timeline/Chicago Boys Initiate Radical Economic Shock Therapy Under Pinochet's Dictatorship

Chicago Boys Initiate Radical Economic Shock Therapy Under Pinochet's Dictatorshiptimeline_event

institutional-captureeconomic-shock-therapypsychological-manipulationneoliberalismchile-economic-policy
1973-09-11 · 1 min read · Edit on Pyrite

type: timeline_event

In the aftermath of the 1973 Chilean coup, the Chicago Boys, a group of economists trained by Milton Friedman at the University of Chicago, began implementing radical free-market economic reforms under Augusto Pinochet's dictatorship. Their 'shock therapy' approach involved rapid economic liberalization, including dramatic policy shifts: reducing customs duties from 94% to 10%, eliminating certain taxes, weakening labor unions, and privatizing public enterprises.

Key Developments:

  • Implemented comprehensive economic transformation under authoritarian conditions
  • Reduced industrial production by 28% in 1975
  • Drove unemployment beyond 25%
  • Dramatically reduced state economic intervention

    • Implications:

  • Demonstrated how psychological manipulation could drive systemic economic transformation
  • Created a model of economic restructuring through authoritarian control
  • Established precedent for neoliberal economic policy implementation