The Chilean big business lobby: a long‐standing and major influence on public policy

• DOI: http://doi.org/10.1002/pa.1520
• Author: Clive S. Thomas,Hernán Rodríguez Fisse
• Date: 01 November 2014
• Published date: 01 November 2014

■Special Issue Paper

The Chilean big business lobby: a long-

standing and major influence on public

policy

Hernán Rodríguez Fisse

1

*and Clive S. Thomas

2

1

Department of Administration, Universidad de Santiago de Chile, Santiago, Chile

2

Foley Institute, Washington State University, USA

Elements of the business lobby, particular sectors of big business and its peak associations, have been a continual

influence, sometimes a dominant force, in Chilean politics since the second half of the 19th century. This prominence

and sustained influence is particularly noteworthy since the 1930s, given the various forms of democracy experienced

in Chile, the harshmilitary dictatorship of the 1970s and 1980s, andbecause the return to democracyin 1990 has meant

increasing competition among interest groups. This article offers an explanation of the political significance of the big

business community by reference to both common factors that shape the influence of business across political systems

and especially the developments in Chile’spolitical economy. Copyright © 2014John Wiley & Sons, Ltd.

INTRODUCTION

Business is among the most influential interests in

all democracies and in many authoritarian regimes.

Many social democracies nationalize large segments

of business, however, and this often limits its politi-

cal influence; and if authoritarian regimes do not

nationalize business, they often place major political

constraints upon it through various forms of state

corporatism. The Chilean case provides an example

of big business taking advantage of political circum-

stances and working to create a political atmosphere

conducive to its interests that enabled it to remain

influential and relatively politically independent

during eras of both dictatorship and democracy.

Although this may not be unique in a global con-

text, it is unusual in the Latin American experience.

The big business lobby was not always united,

however, with periods of internal conflict, particu-

larly between sectoral interests and its business-wide

peak association. Nevertheless,big business was able

to achieve continual political success because it

placed its economic interests above all else and was

willing to go to virtually any lengths to protect these

interests. Over the years, big business moved from

organizing for self-help purposes to a traditional

politicaldefense of its corporate interests,to a first-line

political force that, in effect, replaced the role of

right-wing political parties in Chilean politics. Big

business’s adaptability and resilience involved an

amoral pragmatism that, while it produced political

success, undermined Chilean democracy for many

years, and the vestiges of this influence on the

political system are evident in contemporary Chile.

In the particulars of its case, the role of big busi-

ness in Chilean politics provides a good example

of not only the way that interest group activity often

displays common elements across political systems,

but also how national circumstances can affect these

common elements to produce a unique situation.

This article uses the two-part approach of common

elements of interest group influence combined with

the effect of national circumstances to explain the

Chilean case of the perennial and major influence

of big business.

*Correspondence to: Hernán Rodríguez Fisse, Department of

Administration, Universidad de Santiago de Chile, Alameda del

Libertador Bernardo O’Higgins 3363, Santiago, Chile.

E-mail: hrodrigu@uchile.cl

Journal of Public Affairs

Volume 14 Number 3 pp 310–330 (2014)

Published online 16 June 2014 in Wiley Online Library

(www.wileyonlinelibrary.com) DOI: 10.1002/pa.1520

Copyright © 2014 John Wiley & Sons, Ltd.

To provide background for the analysis, the first

section outlines the development of Chile’s political

economy. Building on this background, the article

turns to the influential elements of the business

lobby and an explanation of its power base over

the years. This includes the following: an explana-

tion of the development of the big business lobby

in the context of the evolution of the Chilean group

system; big business’s special place and treatment

by the Pinochet dictatorship and the democratic

government since 1990; and an analysis of big

business influence over the years, melding theory

and the practical circumstances of Chilean political

development. Then comes an assessment of the

broader influence of the business lobby on Chilean

democracy. The conclusion briefly explains why

business’s political role and influence in Chile is a

textbook case of interest group influence.

CHILE’S POLITICAL ECONOMY—PAST

AND PRESENT

A random survey of people outside Chile in 2014

asking what comes to mind when Chile is men-

tioned would likely reveal five images that more

or less encapsulate the nation’s past and present

political economies. Two would likely be copper

mining and wine. Together, they broadly represent

Chile’s agro-mining economic base past and

present. The third would probably be General

Augusto Pinochet, the ruthless dictator who ran

the country for most of the 1970s and 1980s and

who symbolizes Chile’s periods of authoritarianism.

The fourth and fifth images might likely be of street

protests, particularly toward the end of Pinochet

dictatorship and more recently of student demon-

strations and strikes, and of Michelle Bachelet,

serving her second term as president of Chile

(2014–18) after her first term from 2006 to 2010.

The protests and Bachelet epitomize the move to

democracy, increased political participation, and, to

some extent, the gradual advancement of gender

equality in Chilean politics.

Contemporary Chile: a developed nation

Stretching along the Pacific Ocean with the Andes

and Argentina to the east, and short borders with

Bolivia to the northeast and Peru to the north, Chile

has rich reserves of copper, nitrates, timber, iron ore,

and precious metals. A s a coastal nation, fishing and

fish processing have always been a major industry.

Other industries include foodstuffs, iron and steel,

wood and wood products, transport equipment,

cement, and textiles. The country’s main exports are

copper, fruit, wine, and tulips. China, USA, the

European Union, and Japan are Chile’smainexport

partners (CIA The World Factbook, 2014). Despite a

major diversification of the economy since the 1980s,

copper is still the main industry in Chile, and the

agro-mineral economy remains predominant.

In 2010, the population was just over 17 million of

whom 90% were urbanized and predominantly

White with only a small indigenous population. Sim-

ilar to all Latin Americancountries, Catholicism is the

major religion with 70% of Chileans identifying as

Roman Catholics, 15% as Evangelical, and the rest

with other or no religion (CIA The World Factbook,

2014; World Bank, 2014).

In contrast to most Latin American countries,

however, by several measures, Chile is a developed

country. It was ranked at 53rd in 2013 regarding life

expectancy at birth and 160th in infant mortality

rates, and 99% of the population is literate (CIA

The World Factbook, 2014). Moreover, on the basis of

per capita gross domestic product (GDP), Chile is

the best-off country in Latin America. In 2012, this

per capita amount was $15 452 (equivalent to

$22 363 after taking into account purchasing power

parity on an international basis). Also, in that year,

Chile’s GDP grew by 5.6%, with inflation at only

1.8% (World Bank, 2014).

As Silva (2012, p. 461) puts it, recognition of

Chile’s developed status came in 2010 when it was

accepted into the Organization for Economic

Cooperation and Development (OECD), the club

of developed countries. As such, it was the 31st

member of the OECD and only the second in Latin

America following Mexico that became a member

in 1994 (OECD, 2010). The previous two decades

saw Chile conclude several trade agreements. In

1994, it joined the Asia-Pacific Economic Coopera-

tion, followed by associate membership in the

Southern Cone Common Market, MERCOSUR, in

1996. A trade agreement was signed with the

European Union in 2002 and one with the US in

2003, after the US Congress had failed to act in

1997 to make Chile a member of the North Ameri-

can Free Trade Agreement (NAFTA).

A particular achievement in the period

1990–2010 was the reduction of poverty from 40%

to 15%. Despite this, the middle class remains rela-

tively small and inequality extensive. Chile, in fact,

has one of the most unequal income distributions

in Latin America, more so now than in the 1960s,

and the most unequal of OECD countries (World

Bank, 2014; Silva, 2012, p. 461). Much of this

inequality is the result of the years of military rule

Chilean big business lobby 311

Copyright © 2014 John Wiley & Sons, Ltd. J. Public Affairs 14, 310–330 (2014)

DOI: 10.1002/pa